Wunderlich Calls Duluth Holdings 'A Brand To Build On'

Wunderlich initiated coverage of Duluth Holdings Inc DLTH with a Buy rating, saying the company has plenty of growth drivers that would drive material upside in top and bottom line. The brokerage set a price target of $30, which represents a potential upside of 17.5 percent from Monday's close.

Duluth, an apparel retailer, has managed to achieve 25 consecutive quarters of year-over-year top-line growth.

"Duluth is one of the few lifestyle brands that completely controls its distribution, resulting in consistent pricing and brand messages and the ability to register full value for its products; we note almost 90% of sales are of its branded (Duluth Trading Co.) product. We believe this business model, especially for a lifestyle brand, maximizes returns," analyst Eric Beder wrote in a note.

Among others, the growth drivers for the company include: "1) capturing further "share of closet" from current users and adding new buyers; 2) accelerating store growth; 3) increasing penetration of women's clothing; and 4) deepening the assortments for select men's apparel."

Beder noted the company's goal of 20 percent top line and 25 percent EBITDA and EPS growth is achievable and remains on track.

The analyst expects FY17 and FY18 EPS of $0.70 and $0.88, respectively, on revenue of $379.3 million/$467.7 million.

At time of writing, shares of Duluth were down 2.5 percent to $24.90.