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Kate Spade: Wall Street Says ‘Buy’



Analyst recommendations

The consensus analyst recommendation for Kate Spade’s (KATE) stock is “buy,” which was given by 70.0% of the Wall Street analysts surveyed. The investment companies that have assigned a “buy” recommendation for the stock include Nomura, Barclays, and KeyBanc Capital Markets. The four analysts that gave “hold” recommendation for the stock represent investment companies Wells Fargo Securities and Goldman Sachs.

The average 12-month target price of the company is $26.53. Compared with the closing price from March 1, 2016, the stock has a return potential of 20.6% over the next 12 months.

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Valuation multiple

The current PE (price-to-earnings) multiple of 51.3x is quite expensive compared with the multiples of its peers Michael Kors (KORS), Ralph Lauren (RL), and PVH (PVH), which are trading at 12.9x, 13.5x, and 11.8x, respectively. The industry’s (VCR) historical mean is 18.0x.

Wall Street is optimistic about the stock, due to its high growth generating potential. Wall Street expects the company’s earnings to grow by 67% in fiscal 2016 and 31% in fiscal 2017, which would bring down the forward PE multiple to 27.5x for 2016 and 20.5x for 2017.


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