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NEW YORK (TheStreet) — Michael Kors Holdings (KORS – Get Report) price target was lowered to $46 from $52 at Oppenheimer, which maintained its “perform” rating.
In North America, after two quarters of negative comps, wholesale is decelerating with profitability coming off record highs, the firm noted.
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“While the first quarter of 2016 was better than feared with revenue and gross margin beat, we continue to question the second half of 2016 with minus 15% EPS growth,” Oppenheimer analysts said.
Additionally, in Europe, constant currency comps slowed to MSD, and Michael Kors is accelerating new store openings globally, surprising given mix shift to online and subsequent investments, the firm added.
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Michael Kors is a New York City-based fashion designer of American sportswear.
Shares of Michael Kors are rising 3.33% to $45.30 in afternoon trading on Monday.
Separately, TheStreet Ratings team rates MICHAEL KORS HOLDINGS LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
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“We rate MICHAEL KORS HOLDINGS LTD (KORS) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company’s strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and a generally disappointing performance in the stock itself.”
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Despite its growing revenue, the company underperformed as compared with the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 7.3%. This growth in revenue does not appear to have trickled down to the company’s bottom line, displayed by a decline in 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 3.13, which clearly demonstrates the ability to cover short-term cash needs.
The gross profit margin for MICHAEL KORS HOLDINGS LTD is rather high; currently it is at 61.22%. Regardless of KORS’s high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KORS’s net profit margin of 17.68% compares favorably to the industry average.
Looking at the price performance of KORS’s shares over the past 12 months, there is not much good news to report: the stock is down 45.09%, and it has underformed the S&P 500 Index. In addition, the company’s earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock’s sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Textiles, Apparel & Luxury Goods industry average, but is greater than that of the S&P 500. The net income has decreased by 7.1% when compared to the same quarter one year ago, dropping from $187.72 million to $174.36 million.