Seeking Alpha

Francesca's pares losses after plunging on weak guidance, Canaccord defends

  • Francesca's (FRAN -4.9%) are recovering some of their earlier losses after having plunged as much as 15.8% during pre-market trading. The drop was attributed to weaker-than-expected guidance.
  • Management sees revenue of $90M-$95M in Q4 (+9% to 15% Y/Y) vs. analyst expectations of  $98.3M on comps of -8% to -3%. EPS is seen at $0.25-$0.29 vs. expectations of $0.34. Revenue growth amid a comps slow down comes from continued store openings, with the company planning to open 5 new boutiques in the quarter.
  • Canaccord Genuity, which has been bullish as shares have been run rough-shod since May, defended the retailer but lowered its PT to $30 from $35. Analyst Laura Champine sees the pullback as a long-term opportunity, noting "We do not think FRAN's growth potential is priced in with shares trading at 12x our FY14 EPS estimate and 7x FY14E EV/EBITDA."
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