GES: Growth Trends Remain Compelling

Analysts at Piper Jaffray reiterate their "overweight" rating on Guess? Inc GES, while reducing their estimates for the company. The target price for GES has been reduced from $51 to $50. GES is set to report its Q1 results on Thursday. “We think concern surrounding the health of the European market and FX volatility is overdone, creating a favorable entry point. Core earnings and growth prospects remain attractive and recovery in the domestic market would put GES back on track to drive significant earnings power,” the analysts mention. Piper Jaffray adds, “We are smoothing our model between Q2 and Q3 to better reflect the alignment of ordering cycles on a global basis, which has been a source of merchandise margin gains (+500bps in FQ4). We expect guidance to be prudently conservative, but to suggest comfortable upside….. We expect drivers of profitability in 2010 to include: 1) ongoing +LSD growth in U.S. wholesale revenues; 2) domestic comp sales at +MSD; 3) Europe growth of +low teens, an acceleration from +msd in 2009; and 4) Asia growth at 10%-plus given emerging market status for Guess.” Piper Jaffray has lowered its EPS estimates for FY11 and FY12 from $2.98 to $2.90 and from $3.43 to $3.36, respectively. More Analyst Ratings here