Cowen: Columbia Sportswear's Share Price Doesn't Reflect Portfolio Strength

Columbia Sportswear Company COLM shares are up over 26 percent year-to-date, but the company's brand portfolio is underappreciated, according to Cowen. 

The Analyst 

Cowen analyst John Kernan upgraded Columbia Sportswear from Market Perform rating to Outperform and raised the price target from $90 to $103.

The Thesis

Consensus estimates for Columbia Sportswear are are too conservative heading into next year, and the company is set for its next leg of upside on the basis of its innovation and Project Connect, the company’s plan to adjust to retail's “accelerating structure change," Kernan said in the upgrade note. (See the analyst's track record here.) 

The Columbia brand grew by 18 percent in the first half of 2018, largely driven by product replenishment and direct-to-consumer, which saw 23-percent growth in the same time period, the analyst said. 

The rollout of Project Connect will be ongoing into the second half of the year and enable Columbia to focus on its strategic priorities of driving global brand awareness, expanding direct-to-consumer sales, optimizing its organization and enhancing the consumer and digital experience, Kernan said. 

The brand's inventory flow continues to improve significantly, growing just 2 percent on first half 2018 sales while sales grew 14 percent, the analyst said.

The strength of Columbia’s portfolio is not reflected in its valuation, and the company’s debt-free balance sheet makes further acqusitions — similar to Prana and Sorel — possible, he said. 

Cowen is modeling $6 in EPS potential by 2022. 

Price Action

Columbia shares were trading up 1.54 percent to $91.45 at the time of publication Wednesday.

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Photo by Steve Morgan/Wikimedia.