A Call For Kors to Go Even Higher

Michael Kors Holdings Ltd. (NYSE: KORS) has been on a tear since coming public. The luxury apparel and accessories designer and retailer continually leads the same-store sales results from retail chains each month with massive gains, and its stock has been an amazing performer as it is now up more than 150% from its $20 IPO price from last December to around $52.00 now.

We also are seeing one call this morning with the expectation that shares will go even higher as its chart is on an uptrend.

Zacks Investment Research has a Zacks #1 Rating (Strong Buy) after a 70% earnings surprise on a 71% sales gain. The report noted, "This well-known global luxury brand is riding on the success of its multi-channel strategy, unique design and strong infrastructure." Even with a forward P/E ratio of almost 37, Zacks says that the valuation premium is "justified and well supported by its long-term estimated EPS growth rate of 32.1%" as its return on equity of 33.0% (against 20.6% for peers) suggests that it actively and efficiently reinvests its earnings compared to its peer group.

Kors shares closed at $52.09 on Friday and the post-IPO range is 23.51 to $52.75. Keep in mind that the market capitalization is now $10 billion.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls, Apparel, Retail Tagged: KORS