Can Canada Goose Fly North To 25% Upside In The Next Year?

John Morris of BMO Capital Markets initiated coverage of Canada Goose Holdings Inc. Subordinate Voting Shares GOOS's Toronto-listed stock GOOS with an Outperform rating and C$28 price target.

According to Morris, the maker of high-end outerwear which recently completed an IPO gives investors access to a high-growth retailer at a "reasonable" price. The analyst believes that the Toronto-listed stock will hit his C$28 price target even under his conservative assumptions.

Morris cited four reasons for his bullish stance, including:

1. The potential for acceleration in direct-to-consumer channels from 20 percent to more than 50 percent in five years.
2. Ample space for international growth in the United States, Europe and Asia.
3. Expansion into sweaters and other non-winter apparel and accessories.
4. Growth in the wholesale channel.

Canadians Know Best

Morris emphasized the fact that Canadians know how to navigate a brutal winter better than anyone else, similar to asking an Italian for good pasta.

Morris believes Canada Goose could become a C$1 billion brand in five years given the multiple levers and most important, the company's ability to successfully shift itself from a winter coat company to a combination of a "high-end cold-weather" and a "sophisticated outdoors lifestyle" brand.

Bottom line, the analyst sees a clear path toward a 25 percent-plus sustainable growth rate over the years along with an improving gross margins profile.

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