Market Overview

Wunderlich Reiterates Buy On Cherokee, Iconix & Sequential Brands: Brand Licensing 'Heating Up'


In a report published Wednesday, Wunderlich analyst Eric Beder maintained Buy ratings on Cherokee Inc (NASDAQ: CHKE), Iconix Brand Group Inc (NASDAQ: ICON) and Sequential Brands Group Inc (NASDAQ: SQBG), citing the "sterling start to the brand licensing space in 1H15."

Analyst Eric Beder said that the start to brand licensing in the first have was characterized by "better-than-market returns, solid acquisitions, a fertile debt financing environment, and what we believe will be the group's return to the public equity markets in 2H15."

In the report Wunderlich noted, "Almost every player announced a deal (or two) in 1H15; in fact, there were more brand licensing deals in 1H15 than all of 2014, including brands specifically teed up for licensors, a wide divide between public and private deals, and a partial sale (by Jessica Simpson)."

Beder believes that the brand licensing group was now poised to continue to "outperform the overall market" and generate robust returns for investors in view of "its solid visibility, new alliances, evolving methods of business, and its increasingly receptive shareholder (and brand selling) base."

A marginal increase in interest rates would not be a negative, Beder said, while adding that global uncertainty would be "a key driver for investors looking for high levels of free cash flow and highly visible revenue to invest in the group."

Wunderlich believes that the Cherokee story would evolve into "a strong organic and acquisition-driven potential upside play that should remain highly compelling to investors."

Referring to Iconix, Beder said that it was now up to the Peanuts movie, scheduled for a domestic opening on November 6, to "drive upside potential and register the returns ICON investors are waiting for."

"With the potential to close three major transactions in a year (and potentially more in the mix), we view Sequential Brands as firmly taking the next step to arise as the next brand licensing growth vehicle," the report added.

Latest Ratings for CHKE

Jun 2018Roth CapitalDowngradesBuyNeutral
Mar 2017B. Riley FBRDowngradesBuyNeutral
Sep 2015Roth CapitalMaintainsBuy

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Posted-In: WunderlichAnalyst Color Reiteration Analyst Ratings


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