Buy Nike, Sell Under Armour: A Dozen Consumer Lifestyle Brand Calls From BTIG

An already struggling U.S. retail sector has been devastated by the coronavirus (COVID-19) shutdown. BTIG initiated coverage of 12 consumer lifestyle brands and named its top stock picks in the new era of retail.

The Analyst

BTIG analyst Camilo Lyon initiated coverage on the following 12 stocks:

• Nike Inc (NYSE: NKE), Buy rating, $108 target.
• Lululemon Athletica Inc (NASDAQ: LULU), Buy rating, $261 target.
• Canada Goose Holdings Inc (NYSE: GOOS), Buy rating, $29.43 target.
• Deckers Outdoor Corp (NYSE: DECK), Buy rating, $201 target.
• Lovesac Co (NASDAQ: LOVE), Buy rating, $22 target.
• Yeti Holdings Inc (NYSE: YETI), Buy rating, $30 target.
• VF Corp (NYSE: VFC), Neutral rating, no target.
• Steven Madden, Ltd. (NASDAQ: SHOO), Neutral rating, no target.
• Capri Holdings Ltd (NYSE: CPRI), Neutral rating, no target.
• Tapestry Inc (NYSE: TPR), Neutral rating, no target.
• Columbia Sportswear Company (NASDAQ: COLM), Neutral rating, no target.
• Under Armour Inc (NYSE: UAA), Sell rating, $5 target.

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The Thesis

Lyon expects an acceleration of retail store closures and bankruptcies due to COVID-19. Shoppers can also expect steep discounts as retailers attempt to manage high inventory levels.

Lyon is optimistic store traffic will slowly start to ramp back up and potentially even get back to where it was a year ago by the holiday shopping season.

While 2020 may be extremely difficult for many top brands, Lyon said those that are able to weather the storm could enjoy a dramatic rebound in sales in 2021.

“In short, the brands that were strong entering this downturn will emerge from it stronger, while those that were weak will have compounded challenges to overcome,” Lyon wrote in the note.

Lyon recommends product themes and categories that are working, including home, comfort and athletic apparel. In addition, he favors companies with ample liquidity, and robust and flexible supply chains.

Benzinga’s Take

The economic shutdown has created chaos for physical retailers, and it’s unlikely investors will get a true sense of the long-term fallout for several more quarters. In the meantime, it’s always a safe bet to stick with high-quality companies that have strong balance sheets and consistent, long-term track records.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.