Jefferies Reiterates On Michael Kors, Sees Holiday Promotions 'In Check'

Jefferies reiterated its Buy rating and $100 price target on Michael Kors Holdings Ltd KORS Thursday.

Analysts led by Randal J. Konik commented that “online channel checks show promotional levels at Michael Kors are in check, further reinforced by management's comments that YTD promo levels were rational during our meeting in mid-Dec.”

The analysts thought concerns about promotions “are overblown and [they] would be buyers, especially with KORS shares trading at an all-time low valuation. KORS remains the most compelling name in the handbag space.”

Konik claimed that even if promotions “escalated modestly over the course of the Holiday season, KORS is still best positioned from
a margin perspective when compared to peers. We don't expect meaningful deceleration from peak margins as the company continues to deliver industry-leading SSS growth and international penetration grows as a portion of overall revenue.”

The analyst note concluded, “With valuation at an all-time low, and our work suggesting that promotional levels are in check and low relative to peers, we would use recent weakness as a buying opportunity.”

The $100 PT was based on 21x CY 2015E EPS and 12.5x EV/EBITDA.

Michael Kors Holdings Ltd recently traded at $69.60, up 1.30 percent.