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Canada Goose Heats Up After Q2 Sales Beat: A Sell-Side Roundup

November 15, 2018 4:17 pm
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Canada Goose Holdings Inc (NYSE:GOOS) posted a big second-quarter sales beat Wednesday, and shares of the Canadian apparel company are now up over 100 percent year-to-date.

BofA: 'Plenty Of Room To Grow' 

Bank of America analyst Robert Ohmes reiterated a Buy rating on Canada Goose and raised the price target from $90 to $93.

Canada Goose is one of the most attractive names in the firm's coverage universe, Ohmes said, naming five opportunities for the apparel maker to exceed revenue and EBITDA forecasts: 

  • Early stage growth in China, the world's largest luxury market.
  • Expansion into new categories including footwear.
  • Continued expansion opportunities in North America.
  • Continued gross margin expansion driven by an accelerated shift to direct-to-consumer.
  • A favorable response to new lightweight and knitwear styles.
  • "We estimate GOOS sold less than 1 million units globally in 2018 and still has plenty of room to grow in North America and internationally," the analyst said. 

Baird Cautious In Volatile Market 

Baird analyst Jonathan Komp reiterated a Neutral rating and raised the price target from $80 to $90.

The analyst said he is staying disciplined near-term amid volatile market conditions. 

"Despite our positive fundamental outlook, near-term valuation metrics are the highest in our coverage, suggesting potential vulnerabilities in the event near-term group sentiment moderates from current highs." 

Komp said he can't justify an Outperform rating but could revisit the stance if Canada Goose can sustain the level of sales and earnings outperformance it demonstrated in 2017 and 2018. 

DA Davidson Highlights Baffin Purchase 

D.A. Davidson analyst John Morris reaffirmed a Buy rating on Canada Goose with a $74 price target.

The impressive quarterly results originated from Canada Goose's off-season store productivity, the buildout of its Greater China business and wholesale channel growth, the analyst said. 

The company could reach over $1.5 billion in revenue in five years, Morris said. 

Canada Goose's acquisition of the shoe company Baffin offers category expansion opportunities and brand value through versatility and fashion, the analyst said. 

Canada Goose CEO Dani Reiss called the purchase a dream acquisition on the company's earnings call.

“This is a dream acquisition for me as I’ve been watching and admiring Baffin for many years and I know them very well,” Reiss said. “I believe this is the right move for us to be able to start exploring the category look to ultimately launch Canada Goose footwear.”

Wells Fargo Lifts Price Target By $13

Wells Fargo analyst Ike Boruchow reiterated an Outperform rating on Canada Goose and raised the price target from $85 to $98.

"We continue to view GOOS as one of the most compelling growth stories in the space today, with valuation being the only real investor debate," the analyst said. 

"In such a challenging retail space, we believe that GOOS is a standout growth story given the demand for their brand and their controlled expansion strategy. "

The Price Action 

Canada Goose shares were up 5.85 percent at $68.22 at the close Thursday. 

Related Links: 

Baird Says Canada Goose Sell-Off Is Unwarranted, Upgrades To Outperform

Cramer Likes Retail Stocks, Says Canada Goose Is The 'Best Of The Bunch'

Photo by Gaelen Marsden/Wikimedia. 

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