There’s a lot to be optimistic about in the Services sector as 2 analysts just weighed in on L Brands (NYSE:LB) and Peak Resorts (NASDAQ:SKIS) with bullish sentiments.
L Brands (LB)
B.Riley FBR analyst Susan Anderson reiterated a Buy rating on L Brands today and set a price target of $49. The company’s shares opened today at $32.32, close to its 52-week low of $30.70.
Anderson wrote:
“L Brands (LB) reported June SSS of +3.0%, slightly above the B. Riley FBR/consensus estimates of +2.4%/+2.9% and –9.0% LY . June’s merch margin decreased more than management expected, driven by an extension of the semi-annual sale at VS in order to drive traffic and manage inventory. Inventories per square foot increased +20% Y/Y , but only +1% on a 2-year basis, in line with management expectations. BBW’s second consecutive +10% comp more than offset the decline at VS, driving the better-than-expected overall SSS result. BBW accounts for roughly ~40% of LB’s revenue and nearly 60% of operating profit and, at current LB levels, we believe investors are essentially getting VS for free (see our 5/3/18 SOTP note here).”
According to TipRanks.com, Anderson is a 4-star analyst with an average return of 5.2% and a 52.8% success rate. Anderson covers the Services sector, focusing on stocks such as Lululemon Athletica Inc, Ascena Retail Group, and Abercrombie Fitch.
Currently, the analyst consensus on L Brands is a Moderate Buy with an average price target of $36.92, representing a 14.3% upside. In a report released today, Robert W. Baird also maintained a Buy rating on the stock with a $45 price target.
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Peak Resorts (SKIS)
In a report released today, Barton Crockett from B.Riley FBR maintained a Buy rating on Peak Resorts, with a price target of $6. The company’s shares opened today at $5.45.
Crockett noted:
“Peak Resorts’ (SKIS) F4Q18 featured a better top-line rebound from a difficult year-ago period than we had modeled, but also higher expenses, reflective of surprisingly difficult labor cost pressures. Peak anticipates mitigating cost pressures this year by ramping up price escalators to the 6% to 8% range, above past norms of 3% to 5%. Assuming weather conditions are OK next season (never a sure thing) we see greater potential in the ski industry than other consumer sectors for above-inflation price hikes, as skiers skew to above average income/resources and generally seem enthusiastic for the experience. Vail, with an early June announcement of a deal to buy Okemo (near Peak’s flagship Mount Snow) is moving deeper into Peak territory.”
According to TipRanks.com, Crockett is a 4-star analyst with an average return of 6.4% and a 59.7% success rate. Crockett covers the Services sector, focusing on stocks such as Qurate Retail Group Inc, Sinclair Broadcast, and Formula One Group.
The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Peak Resorts with a $6 average price target.
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