Did Analysts Miss the Boat on Michael Kors?

Retail

Published: February 6, 2016 10:10 am

Last Updated: January 13, 2020 1:32 pm

Michael Kors Holdings Ltd. (NYSE: KORS) reported its fiscal third-quarter financial results before the markets opened on Tuesday. This stock had been battered and bruised, and it disappointed on earnings numerous times. However, this time when the company beat earnings, the analysts who had cut their targets on the way down had to lift their targets up again.

The company had $1.59 in earnings per share (EPS) on $1.40 billion in revenue. That compared to Thomson Reuters consensus estimates of $1.46 in EPS on revenue of $1.36 billion. The same period from the previous year had EPS of $1.48 and $1.31 billion in revenue.

Retail net sales increased 11.1% to $766.2 million, driven primarily by e-commerce sales from the company’s digital flagships and 114 net new store openings since the end of the third quarter of fiscal 2015.

In terms of guidance, the company expects to have EPS in the range of $0.93 to $0.97 and revenues between $1.13 billion to $1.15 billion for the fiscal fourth quarter. The consensus estimates call for $1.00 in EPS on $1.16 billion in revenue.

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A fair number of analysts jumped on Michael Kors following the release of the earnings report:

Baird has a Neutral rating and raised its target price to $52 from $42.
Wedbush has a Neutral rating and raised the target price to $52 from $39.
Merrill Lynch has a Neutral rating and raised its target from $45 to $54.
Canaccord Genuity has a Hold rating and raised its price target to $48 from $39.
Deutsche Bank has a Buy rating and raised its target price to $56 from $50.
Citigroup has a Neutral rating and raised its target price to $55 from $38.
Goldman Sachs has a Neutral rating and raised its target price to $51 from $45.
BMO has a Market Perform rating and raised the price target from $40 to $46.
Citigroup upgraded it to Neutral from Sell.
Credit Suisse has a Neutral rating and raised its price target from $56 to $57.
Nomura has a Buy rating and raised the target price to $60 from $53.
RBC has a Sector Perform rating and raised its target price to $52 from $48.

Shares of Michael Kors closed trading at $51.86 on Friday, with a consensus estimate of $56.04 and a 52-week trading range of $34.83 to $73.47.

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