UBS initiates coverage on Accent Group with a Buy rating and a $3 target price. The company operates in the performance and lifestyle retail market, mainly in footwear though with a growing apparel business.
The broker forecasts a post-covid recovery, and then an ongoing modest expansion of earnings (EBIT) margins. The metric, cost of doing business (CODB)/Sales, is expected to fall due to operating leverage and lower rent/sales.
The key retail revenue growth driver is the number of stores, notes the analyst, with opportunities across larger brands and its recently acquired brands. The former are (Platypus, Hype, Skechers), while the latter are Stylerunner and Glue.
Sector: Retailing.
Target price is $3.00.Current Price is $2.38. Difference: $0.62 – (brackets indicate current price is over target). If AX1 meets the UBS target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
