Michael Kors upgrade details -- to Outperform at Oppenheimer; tgt raised to $55 (44.65)
Oppenheimer upgrades KORS to Outperform from Perform and raises their tgt to $55 from $44. In the last 2+ years, valuation stayed cheap (10-11x P/E) as profitability kept eroding (EBIT margins declined from 30% in '14 to 16.5% this year); now with AUR up for the first time in F1Q18 (in both Wholesale and Retail), margins seem to be finding the bottom, while sentiment is extremely negative (three Outperform, 16 Neutral/Underperform ratings). While firm remains wary on N. Am. Wholesale reset (28% of sales significant vs. 40% four years ago), Retail beat last quarter (in N. Am. and Europe) as improved product is resonating at full price; they think ests are poised for upside, with GMs inflecting (COH's profitability troughed at 17%-18%)