NEW YORK (TheStreet) -- Shares of Michael Kors Holdings (KORS) are slipping 2.51% to $76.21 in early market trading Wednesday after the luxury fashion brand had its rating lowered to "neutral" from "buy" at Janney Capital Markets this morning.
Analysts at the firm lowered its price target to $87 from $105, citing the company's macro concern, including a potential softening in the global luxury and European markets.
Janney Capital also said Michael Kors' brand strength is intact, but says the inventory spike to support growth adds potential margin risk in the case that sales do not continue to outpace expectations.
Separately, TheStreet Ratings team rates MICHAEL KORS HOLDINGS LTD as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICHAEL KORS HOLDINGS LTD (KORS) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 15.0%. Since the same quarter one year prior, revenues rose by 43.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- KORS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.20, which clearly demonstrates the ability to cover short-term cash needs.
- MICHAEL KORS HOLDINGS LTD has improved earnings per share by 49.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MICHAEL KORS HOLDINGS LTD increased its bottom line by earning $3.21 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($4.05 versus $3.21).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Textiles, Apparel & Luxury Goods industry. The net income increased by 50.2% when compared to the same quarter one year prior, rising from $125.00 million to $187.72 million.
- The gross profit margin for MICHAEL KORS HOLDINGS LTD is rather high; currently it is at 62.19%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.42% is above that of the industry average.
- You can view the full analysis from the report here: KORS Ratings Report