Cowen Stays Bullish On Columbia Sportswear After Q1 Beat, Footwear Remains Biggest Opportunity

Columbia Sportswear Company COLM shares are off on Friday despite reporting a big first-quarter earnings beat and raised guidance.

The Analyst

Cowen's John Kernan maintains an Outperform rating and raised his price target from $120 to $123.

The Thesis

Kernan continues to see upside to consensus estimates this year driven by strength in the domestic Columbia, PFG and Sorel businesses.

“While International will likely need to accelerate to maintain current company growth rates, for now we see conservative consensus estimates through FY20,” Kernan wrote in a note.

Columbia’s Project CONNECT initiative continues to drive outperformance and provided well over half of the gross margin expansion in the quarter, Kernan said.

Kernan also said footwear remains vone of Columbia's largest growth opportunities and grew 12 percent in the first quarter, representing 20 percent of sales.

Cowen feels current guidance is conservative and assumes significant EPS deceleration in the second half of 2019. The firm sees long-term EPS potential above $7 through 2023, on a low-double digit revenue CAGR and operating margin expansion to a mid-teens rate from low-double digit in 2018.

Price Action

Columbia Sportswear shares are down 2.5 percent to $101.77 Friday afternoon.

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