Monday, KeyBanc Capital upgraded G-III Apparel Group, Ltd. (GIII) shares to Buy from Hold with a price target of $22. The brokerage lowered its 2009 EPS estimate to $1.32 from $1.35, while raising its 2010 estimate to $1.85 from $1.72.
Analyst Edward Yruma thinks that over the next three years, an 8% operating margin, up from an estimated 5.7% in 2009, is possible given a stabilization at Wilsons and further growth of sportswear and dresses. The analyst's recent management meetings with COO Wayne Miller and CFO Neal Nackman reinforce his positive view on the near and long-term earnings potential of the enterprise.
Moreover, the company is likely to do an acquisition over the next 12 months, giving it even greater earnings power. At a mere 9.5x, the analyst's upwardly revised 2010 EPS estimate, he finds valuation compelling for investors. At 0.6x EV/sales, vs. a 0.9x apparel group mean, the analyst finds the valuation attractive and establish an initial price target of $22.
Currently, GIII is up $0.96 or 5.45% and trading at $18.59.
For comments and feedback: editorial@rttnews.com