Piper launches cautious coverage on consumer retail stocks amid recession, macro concerns

Jul. 22, 2022 12:41 PM ETWMT, TGT, JWN, PVH, GIII, OXM, ETSY, FTCH, SFIX, RPAY, RVLV, PTON, REAL, FIGS, AKA, WRBY, BIRD, RENTBy: Preeti Singh, SA News Editor5 Comments

Harbour City, Hong Kong shopping mall

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Piper Sandler has initiated coverage on several consumer retail stocks including Brands Holding (AKA), Allbirds (BIRD), Etsy (ETSY), Farfetch (FTCH), G-III Apparel Group (GIII) and Rent the Runway (RENT).

The analysts noted that they broadly "remain selective, but believe we are approaching broadly attractive entry points."

Piper Sandler forecasts a 2022/2023 recession, and conversations with management teams in companies being covered point to rising concerns over macro conditions and uncertainty over spending.

Even though valuations have nearly bottomed out on almost all metrics, Piper noted that the risk of downward earnings revisions remains high due to elevated inventory levels and macro pressures. The company is most constructive on stocks with near-term demand drivers.

Across its sector coverage, Piper is most favorable on companies benefiting from higher consumer activity levels in the near term, and companies with strong repeat consumer behavior in the long run.

Here is a look at the companies Piper launched coverage of with an Overweight rating:

  • Brands Holding (AKA), PT $5; shares down 32%
  • Allbirds (BIRD), PT $10; -5%
  • Warby Parker (WRBY), PT $20; +0.3%
  • Figs (FIGS), PT $15; -3%
  • G-III Apparel Group (GIII), PT $28; +0.3%
  • Nordstrom (JWN), PT $28; -2%
  • Oxford Industries (OXM), PT $110; +0.4%
  • Rent the Runway (RENT), PT $10; -9%
  • Revolve Group (RVLV), PT $42; 3%

The following companies were launched with a Neutral rating:

  • Etsy (ETSY), PT $95; +0.2%
  • Farfetch (FTCH), PT $9; -6%
  • Peloton Interactive (PTON), PT $12; -12%
  • PVH (PVH), PT $68; -2%
  • The RealReal (REAL), PT $4; -14%
  • Target (TGT), PT $190; -0.8%
  • Walmart (WMT), PT $135; -0.3%

Stitch Fix (SFIX) is the only company that Piper began coverage of with an Underweight rating, with a PT of $3.

Piper's analysts summarized: "Intensifying macro pressures, unpredictable spending shifts, and the ongoing balance between digital and physical sales reminds us of our favorite Wilson Philips song – Hold On."

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