Michael Kors Shares Gain Steam on Earnings Beat
Michael Kors Holdings Ltd (NYSE:KORS) shares skyrocket 22% today, after the fashion accessories maker reported better-than-expected fiscal first-quarter results accompanied by an improved Q2 outlook and a slight raise to the FY18 guidance. Specifically, the company posted EPS of $0.80, exceeding consensus estimates of $0.62. In tandem with the Q1 beat, Q2 guidance was issued at $0.80-$0.84 and FY18 EPS was raised to $3.62-$3.72 (prior range of $3.57-$3.67).
In reaction, Piper Jaffray analyst Erinn Murphy raised her price target to $46.00 (from $34.00), while reiterating a Neutral rating on the stock. (To watch Murphy’s track record, click here)
Murphy noted, “We are raising our FY18 and FY19 estimates from $3.42 and $3.52 to $3.77 and $3.85, respectively. We note wholesale GM%, which was down 490 bps is planned to be down significantly the entire year. Additionally, KORS is no longer buying back any stock beyond the amount repurchased QTD. At the end of Q1, the company had ~$2 in cash per share. We are raising our PT from $34 to $46 on given improved NTM visibility following management’s upwardly revised guidance.”
Bottom line: “We are raising our estimates & PT but need to see more evidence in brand & comp momentum (still no improvement in 2-year stacks) before revisiting our rating.”
Out of the 11 analysts polled in the past 3 months, 1 rates Michael Kors stock a Buy, 9 rate the stock a Hold and 1 recommends a Sell. With a downside potential of nearly 14%, the stock’s consensus target price stands at $39.10.
LendingClub Woos Investors Back with Solid Q2
LendingClub Corp (NYSE:LC) shares jumped nearly 18% in Tuesday’s trading session, after the peer-to-peer lending firm posted strong second-quarter results with net revenues and margins coming in ahead of consensus expectations. Additionally, the company raised its FY17 revenue and EBITDA guidance range, signalling a return to sustainable growth.
While Canaccord’s Michael Graham welcomes this renewed momentum, the analyst looks for evidence of more consistent execution to become more constructive on the stock. As such, Graham reiterates a Hold rating on LC, with a price target of $7.00.
Graham wrote, “Our takeaways from the quarter are that the company has resumed originations growth, begun to roll out borrower initiatives and has completed its first self-sponsored securitization – a new growth vehicle for the company. Meanwhile, institutional demand continued to improve, with banks comprising 44% of total volumes in Q2, up from 40% in Q1. We believe originations will continue to grow sequentially in Q3/Q4, helping to re-accelerate net revenue growth in H2/17 and enabling notable sequential margin expansion. We believe new borrower initiatives and product enhancements coupled with strong institutional demand should help support the stock leading into the company’s analyst day later this year.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Michael Graham has a yearly average return of 13.7% and a 60.5% success rate. Graham has a -52.6% average loss when recommending LC, and is ranked #134 out of 4628 analysts.