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Investing.com --TD Cowen upgraded Canada Goose to Buy, saying the luxury parka maker is reinventing itself as a year-round lifestyle brand, which could lift sales and margins.
Shares of the company were trading up 8% at $14.4 on Monday.
The company’s modernization of products and marketing, combined with an improved in-store experience, is starting to pay off, as per TD.
TD Cowen raised its price target on the stock to $18, saying Canada Goose’s evolution beyond its core winter jackets positions it for more consistent growth in the global luxury market.
New creative director Haider Ackermann who was appointed last year, has brought a “more culturally relevant creative vision,” which analysts expect will drive demand in upcoming quarters.
TD Cowen said sales growth could accelerate as new products reach stores and recent marketing investments draw in younger and more fashion-conscious consumers.
The analysts noted that Wall Street’s expectations for the next two quarters remain relatively modest, which could leave room for positive surprises.
The firm also pointed to Canada Goose’s financial profile as a support for the stock, highlighting strong cash flow, low debt and vertical integration of its supply chain.
The company also remains an attractive potential takeover target having generated several bids for its take private.
“Fundamentals are improving based on compelling product assortment married with captivating marketing and enhanced in-store experience,” the analysts wrote.
They added that operating margins, currently below other luxury peers, have room to expand as revenue grows.