NEW YORK (TheStreet) -- Shares of Michael Kors Holdings (KORS) are up 0.07% to $61.14 after Wedbush initiated coverage on the New York City-based fashion company with a "neutral" rating and $63 price target.
Wedbush analysts said the stock was "on sale" at current levels.
Additionally, analysts thought it was too early to make a call on stabilization due to steady sequential slowing in SSS, traffic and EBIT margin in recent quarters, and higher promotions in the handbag category.
Michael Kors is a luxury brand company that began as a luxury sportswear company, but has expanded into accessories such as bags, jewelries, and watches.
The luxury retailer announced that it plans to report its fourth quarter and fiscal 2015 financial results on May 27.
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 a few notable strengths, 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, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel its 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 9.9%. Since the same quarter one year prior, revenues rose by 29.9%. 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 3.64, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, MICHAEL KORS HOLDINGS LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- MICHAEL KORS HOLDINGS LTD has improved earnings per share by 33.3% 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 ($4.30 versus $3.21).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Textiles, Apparel & Luxury Goods industry average. The net income increased by 32.2% when compared to the same quarter one year prior, rising from $229.64 million to $303.68 million.
- You can view the full analysis from the report here: KORS Ratings Report