Why Michael Kors Holdings Ltd. Slipped Today

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Michael Kors  (NYSE: KORS  ) slipped about 2% on Tuesday after Barclays initiated coverage on the specialty retailer with an underweight rating.

So what: Along with the bearish view, analyst Joan Payson planted a price target of $85 on the stock, representing about 14% worth of downside to yesterday's close. So while momentum traders might be attracted to the stock's strength over the past year, Payson's call suggests investors could be underestimating some of the challenges that could weigh on Michael Kors' growth rate.

Now what: According to Barclays, Michael Kors' risk/reward trade-off isn't too appealing at this point. "[W]e expect that strong growth in Europe could be offset by the North American business, which we think has reached a point of maturity more quickly than anticipated and may begin to decelerate," said Payson. "Assuming a slowdown occurs, we expect margin pressures will become more evident, tempering EPS growth." Of course, with Michael Kors still sporting a reasonable PEG of 1.2 and boasting a rock-solid balance sheet, long-term-oriented growth investors might want to take that bearishness with a grain of salt. 

More compelling ways to grow
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 24, 2014, at 6:01 AM, jackfleming wrote:

    Michael Kors Holdings Limited (KORS) stock has performed exceptionally since the company announced its IPO in FY11. The analysts believe that it still offers considerable upside because

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2880412, ~/Articles/ArticleHandler.aspx, 11/28/2014 10:53:18 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement