HSBC Says Michael Kors (NYSE: KORS) Is A Buy, But It's Not
Michael Kors Holdings Limited design, markets, distributes, and retails branded women's and men's apparel and accessories. It operates in four segments: MK Retail, MK Wholesale, MK Licensing, and Jimmy Choo. The MK Retail segment sells women's apparel; handbags and small leather goods; men's apparel; footwear; and licensed products comprising watches, jewelry, fragrances, and beauty and eyewear. It operates collection stores and lifestyle stores, including concessions and outlets.
Erwan Rambourgm HSBC Securities global co-head of consumer and retail research, says Michael Kors is a buy with a price target at $88. According to Erwan, Michael Kors has a valuation that is "too low to ignore."
"While we acknowledge the group has some structural weaknesses that will take them some time to address — notably a very large and profitable exposure to wholesale — it is in the midst of a recovery phase," wrote HSBC Securities analyst Erwan Rambourg in a Monday note to clients. "The stock's (price-to-earnings ratio) suggests the market does not believe in a recovery, and while a blue sky scenario is unlikely to unfold in the long term, the short term presents a buying opportunity in our view."
Lets go to the charts.
Monthly Chart (Curve Timeframe) – monthly supply is at $95 and monthly demand is at $48.
Weekly Chart (Trend Timeframe) – the trend is up, with buyers at $56 and immediate resistance at $70 and with the first real sign of sellers at $74.
There is no trade set-up to go long on Michael Kors, with resistance and sellers just above, the Reward to Risk isn’t worth it. However, if price ever did make it to $90, I would love to short the stock at that level.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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