Mizuho Turns Positive On Kate Spade, Notes Strong Holiday Conversion

Betty Chen of Mizuho Securities on Friday upgraded shares of Kate Spade & Co KATE to Buy from Neutral with a price target raised to $33 from a previous $28 following an online survey of more than 400 U.S. consumers.

Chen notes that over 48 percent of those surveyed indicated they purchased a Kate Spade product during the holiday period despite moderated promotions. The survey also showed a “very balanced mix” of sales generation by channel with retail at 39 percent and online at 32 percent.

“We were impressed by Kate Spade's ability to lead the overall group with the highest percentage of purchases during the critical Holiday season with 48 percent,” Chen wrote. “Moreover, the brand showed a meaningful gain in the proportion of respondents who purchased from Kate Spade within the past three months versus nine to 12 months ago.”

Chen adds that despite the company's infancy, indications of high purchase intent and solid fashion ranking suggests the company is likely to benefit from revenue and margin expansions over the long-term as it continues to expand its distribution network.

The analyst concludes by stating that the findings of the survey bodes well for the upcoming fourth-quarter same-store sales opportunity.