Market Overview

Baird's Top Retail Picks Post-Brexit

Share:
Baird's Top Retail Picks Post-Brexit

Baird has listed out its retail picks amid post-Brexit volatility.

The brokerage's Outperform-rated stocks with limited U.K./European exposure include Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ: ULTA) (0 percent), Lululemon Athletica inc. (NASDAQ: LULU) (<2 percent), Kohl's Corporation (NYSE: KSS) (0 percent) and J C Penney Company Inc (NYSE: JCP) (0 percent).

Baird also likes Nordstrom, Inc. (NYSE: JWN) and Vera Bradley, Inc. (NASDAQ: VRA) due to their negligible international exposure.

Other Elements To Keep In Mind

"F/X translation presents the greatest near-term risk to estimates following sharp currency moves today — although U.K. exposure is rather modest across our list," analyst Mark Altschwager wrote in a note.

Related Link: 4 Reasons The U.S. Is So Sensitive To Global Events Like Brexit

"Looking beyond currency exposure, we're mindful of the risks of a broader economic slowdown as events in Europe and the U.S. presidential election cycle add uncertainty to an already low-growth backdrop — all of which may pressure stock valuations (group relative valuation now 1 standard-deviation below 10-year average)," the analyst continued.

The analyst remains constructive on his 2016 top ideas including Ulta, Lululemon and Sally Beauty Holdings, Inc. (NYSE: SBH) given stronger category growth (beauty, active) and company-specific sales and margin initiatives.

The analyst also sees tactical opportunities in the second half in the shares of Kohl's and JC Penney due to easy fourth-quarter sales/margin comparisons, no international exposure, inexpensive valuation and customer bases that are less sensitive to stock market volatility.

International Exposure

Baird also presented a list of stocks in its coverage that has international revenue exposure:

  • Coach Inc (NYSE: COH) international: "~42 percent of sales, although Europe (including U.K.) remains rather small (<3 percent)."
  • Abercrombie & Fitch Co. (NYSE: ANF) international: "~35 percent of sales, including U.K. ~5 percent and rest of Europe ~19 percent."
  • Michael Kors Holdings Ltd (NYSE: KORS) international: "~32 percent of sales, including U.K. ~3 percent and rest of Europe ~18 percent."
  • Lululemon international: "~27 percent of sales; U.K./Europe exposure remains small today (<2 percent)."
  • Gap Inc (NYSE: GPS) international: "~24 percent of sales, including U.K. ~4 percent and rest of Europe ~1 percent."
  • Sally Beauty international: "~19 percent of sales, including U.K. ~5 percent and rest of Europe ~4 percent."
  • Urban Outfitters, Inc. (NASDAQ: URBN) international: "~15 percent of sales, including U.K. ~2 percent and rest of Europe ~6 percent."
  • L Brands Inc (NYSE: LB) international: "~14 percent of sales (VS & BBW), including UK estimated <2 percent and rest of Europe <2 percent."
  • Vince Holding Corp (NYSE: VNCE) international: "~10 percent of sales, including Europe <2 percent."

Latest Ratings for ANF

DateFirmActionFromTo
Apr 2020Morgan StanleyMaintainsUnderweight
Apr 2020B. Riley FBRMaintainsBuy
Apr 2020B. RileyUpgradesNeutralBuy

View More Analyst Ratings for ANF
View the Latest Analyst Ratings

 

Related Articles (ANF + COH)

View Comments and Join the Discussion!

Posted-In: Baird Mark AltschwagerAnalyst Color Long Ideas Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
ASMLWells FargoMaintains430.0
COSTOppenheimerMaintains355.0
SAPRBC CapitalMaintains150.0
BYNDBernsteinMaintains133.0
CMGCredit SuisseMaintains1,150.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com