Roth Capital Reiterates Buy On American Apparel, Increases PT To $1.25

Roth Capital analyst Dave King today issued a note in which he reiterated a Buy rating on American Apparel (NYSE:APP) and raised his price target from $1 to $1.25, following the company’s release of its second-quarter results.

King wrote, “American Apparel reported 2Q14 GAAP EPS of ($0.09). Excluding an $8.2M loss on the fair value of outstanding warrants, $1.4M of costs related to the suspension of CEO Dov Charney, $1.0M for a legal settlement on a past industrial accident, and $1.4M of other items, we peg core EPS at ($0.03), ahead of our ($0.06) estimate. The upside to our projection stemmed from lower-than-expected operating expenses. Management narrowed its 2014 adjusted EBITDA guidance to $40M-$45M from $40M-$50M previously. Although this implies lower-than-expected profitability for 2H14 due to lackluster sales trends, we are encouraged that the company continues to make progress on reducing costs.” 

King continued, “Revenue held flat YOY at $162.4M, essentially in-line with both previously-reported preliminary results of $162.0M and our prior $162.5M estimate. Wholesale revenues grew 9%, while retail sales comped down 6% with online declining 3%. We attribute this weakness to recent management distractions amidst a challenging environment. Post-quarter, we believe July sales trends were particularly weak, but have since rebounded heading into Back-To-School.”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Dave King has a total average return of 4.2% and a 51.9% success rate. King has a -8.6% average return when recommending APP, and is ranked #1376 out of 3250 analysts.

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