UBS downgraded Express, Inc. EXPR to Sell from Neutral and slashed the price target by $6 to $10, saying EPS risk is skewed to the downside on deteriorating traffic, weaker same store sales trends, product issues and potential margin pressures.
"While EXPR believes its merchandise will be in a better position in 4Q/early '17, we didn't hear a clear diagnosis of product issues other than the consumer being confused by too much choice in 2Q. And guidance for traffic to remain a headwind through 4Q left us concerned that fixing the product issue could take more than 1-2 qtrs," analyst Michael Binetti wrote in a note.
The analyst, who said the company may to have ramp up store closures further, cut his third quarter EPS estimate to $0.13 from $0.34 (versus guidance of $0.09 - $0.15) based on 9.1 estimated drop in same-store sales (guidance -HSD-LDD). Binetti also lowered his fourth quarter EPS view to $0.57 from $0.74 based on 8 percent estimated fall in same-store sales.
Still, the analyst sees downside risk to his fourth quarter estimate "given low visibility that product can improve significantly enough in the NT to bolster traffic trends-and expectations for aggressive industry-wide promotional levels."
As such, the analyst also trimmed his FY16 EPS forecast to $1.08 (from $1.51), in-line with lowered guidance of $1.00-$1.14 (previous $1.41-$1.54).
At time of writing, shares of Express were down 0.54 percent to $11.88.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.