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Need A Reason To Buy Michael Kors? UBS Offers 8

Need A Reason To Buy Michael Kors? UBS Offers 8

UBS turned bullish on Michael Kors Holdings Ltd (NYSE: KORS) after a dive into multiple aspects of the luxury fashion company's business. 

The Analyst

Analyst Jay Sole upgraded Michael Kors Holdings from Neutral to Buy with a price target lifted from $76 to $80.

The Thesis

Sole named eight factors behind UBS' bullish stance on Michael Kors. (See his track record here.) 

They are: 

  • A survey of millennial handbag customers found the Michael Kors brand commands the highest favorability among 33 brands and has been steadily improving in ranking since 2015.
  • The brand is benefiting from good near-term sales momentum within the direct-to-consumer channel.
  • Michael Kors boasts a higher overall rating among employees compared to its competition based on a study of Glassdoor ratings. This implies the company is "functioning well," and this is not fully appreciated by the market, Sole said. 
  • The market isn't pricing in Jimmy Choo and Versace's clear drivers of EBITDA growth in Michael Kors' stock price.
  • Encouragingly, the company's recently acquired Versace brand had more likes on Instagram than any other luxury brand with the exceptions of Gucci and Dior.
  • Google Search trends suggest Versace's brand is benefiting from recent momentum.
  • Handbag pricing trends are "getting less bad" with few big brands selling many items north of $500.
  • Geospatial data points to decreasing competition as industrywide store count closures accelerate.

Price Action

Michael Kors shares were trading higher by 1.64 percent at $58.30 at the time of publication Friday. 

Related Links:

Survey: Michael Kors Still The Preferred Handbag Among Teens

Citi: Michael Kors A Buy After Versace Acquisition

Photo by See-ming Lee/Wikimedia. 

Latest Ratings for KORS

Jan 2019Wells FargoMaintainsMarket PerformMarket Perform
Nov 2018OppenheimerDowngradesOutperformPerform
Nov 2018MacquarieInitiates Coverage OnOutperform

View More Analyst Ratings for KORS
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