DSW stock price target cut to $29 from $33 at MKM Partners

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DSW shares slide 7%, analyst says Camuto deal adds uncertainty to outlook

Shares of discount shoe retailer DSW Inc. slid more than 7% Wednesday, after the company said it’s acquiring the Camuto Group in partnership with Authentic Brands for about $375 million. The news adds uncertainty to DSW’s outlook and comes after an expected slightly earnings-boosting acquisition of Town Shoes, said Wedbush analyst Christopher Svezia. This latest deal is one that will hurt earnings and require expertise and focus, Svezia wrote in a note. “Though over the longer term, the acquisition may end up a positive (incremental revenue streams, gross margin benefits), in the near to medium term, there is also risk around tariffs (likely high exposure to Chinese sourcing, possible that handbags may be impacted already), investments, and general integration,” said the note. “While more about the Camuto business will be learned, including in our upcoming meetings with management on Thursday 10/11, the transaction adds to near term uncertainty around the outlook and DSW shares.” Wedbush has a neutral rating on DSW with a $29 12-month stock price target, below its current trading level of $30. Shares have gained 41% in 2018, while the S&P 500 has gained 7%.

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