Citi Pleasantly Surprised By Michael Kors, Upgrades To Neutral

• Michael Kors Holdings Ltd (NYSE: KORS) shares jumped 24 percent on February 2.
• Citi’s Paul Lejuez upgraded the rating for the company to Neutral, while raising the price target to $55.
• Michael Kors’ performance in Q3 was better than feared, Lejuez stated.

See Also: Michael Kors Soars 15% After Q3 Print

Michael Kors’ business had been deteriorating over the last several quarters. The company’s business was expected to decelerate further in Q3, but this did not happen, analyst Paul Lejuez mentioned. He commented, “What we are left wondering is whether this was a true bottoming out of the business or if this was more of a head fake in a business that may continue to face pressure.”

The longer-term concerns persist related to the broad distribution of the brand within bricks and mortar, including own stores and departmental stores, Lejuez said. He added, however, that the positives and negatives balance off “pretty evenly” in the near term.

Even though Michael Kors’ shares have gained 25 percent, the rating has been revised upwards due to the change in the company’s business trajectory and the increase in estimates, the analyst said.