Market Overview

Guess Headed For North American Inflection, Jefferies Says In Upgrade

Share:
Guess Headed For North American Inflection, Jefferies Says In Upgrade

Guess? Inc. (NYSE: GES) may be on the verge of a comeback.

The Analyst

Jefferies analyst Janine Sticher upgraded Guess from a Hold to a Buy and maintained a $24 price target.

The Thesis

Guess’ recent share pullback presents an opportunity to own one of the few remaining retailers with both top-line growth and the potential for margin expansion, Sticher said in a Thursday note.

In late January, Guess announced the abrupt departure of CEO Victor Herrero, who is set to be replaced by Carlos Alberini, who was previously the retailer's COO from 2000-2010. The analyst views the management change as an opportunity rather than a sign of weakness.

“We view the pullback as an opportunity, as we think the change is unrelated to current business, and our work around Mr. Alberini’s track record points to potential to further elevate the organization," Sticher said.

Guess has a substantial runway for growth ahead in Europe and Asia, and data suggests inflecting North America momentum, the analyst said. A 7.5-percent operating margin over the medium-term is achievable, she said.

“On roughly $3 billion in sales, this would imply $2 in EPS — essentially a doubling of current earnings power."

5 Reasons For Jefferies' Upgrade

  • Management change is an opportunity, not a red flag.
  • Macro fears are overshadowing a global growth opportunity
  • Data shows North America is picking up momentum.
  • Runway for margin expansion.
  • Recent pullback presents attractive risk-reward.

Price Action

Guess shares were set to close Thursday's session 4.1-percent higher at $21.05.

Related Links:

Baird Names Canada Goose A 'Fresh Pick' Ahead Of Q3 Print

Cowen: Speed-To-Market Initiatives Are Emerging Catalysts For Nike, Adidas, While Kohl's Leads In Private Label

Public domain photo via Wikimedia.

Latest Ratings for GES

DateFirmActionFromTo
Feb 2019UpgradesHoldBuy
Feb 2018UpgradesNeutralBuy
Feb 2018DowngradesOverweightSector Weight

View More Analyst Ratings for GES
View the Latest Analyst Ratings

Posted-In: Apparel Janine Sticher JefferiesAnalyst Color News Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (GES)

View Comments and Join the Discussion!

IATA – Weak December Weighs On Full-Year Air Cargo Activity

Canopy Growth To Expand Investment In US Hemp Industry