Ahead of the Bell: Analyst starts J.Crew coverageAssociated Press
September 26, 2008
An analyst started coverage of preppy retailer J.Crew Group with a "Hold" rating on Friday, saying that long-term prospects are good, but inventory is high and domestic consumer spending remains soft.
Jefferies & Co. analyst Randal Konik expects new stores and concepts, such as Crewcuts and Madewell, to drive growth. Long-term, Konik predicts sales growth of at least 10 percent and earnings per share growth near 20 percent.
Konik called J.Crew "a true standout in a dead sea of retail," given a "maniacal" commitment to customer service and product quality that attracts loyal customers.
However, Konik said shares need a catalyst, especially given high inventory, slowing sales and a weak U.S. economy. "Potential positive catalysts of reduced inventories and reaccelerating top-line are likely a few quarters away," Konik wrote.
Konik's $28 price target implies downside of 2.4 percent to Thursday's closing price of $28.69. Shares fell 3 cents in premarket trading Friday.
What are your thoughts on the article? Do you agree or disagree with the "hold" rating? Would you buy, sell, or hold J.Crew stock?
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