Credit Suisse Sees Many Retailers and Brands Offering Big Upside Ahead

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Ross Stores Inc. (NASDAQ: ROST) was started with an Outperform rating and assigned a target price of $88 (versus a $76.43 close). Credit Suisse called it a company that has been a standout performer with consistent double-digit earnings growth from a balance of same-store sales gains and margin improvement.

Kohl’s Corp. (NYSE: KSS) was started with an Outperform rating and assigned a target price of $72. It previously closed at $63.76, has a consensus target price of $69.47 and has a 52-week range of $35.16 to $69.48. Kohl’s also has a dividend yield of about 3.8%. It is considered to be the first major department store to be seen as a reinvestment opportunity in years, and Credit Suisse was surprised how much Kohl’s traffic-driving strategies worked in the fourth quarter.

Foot Locker Inc. (NYSE: FL) was started with an Outperform rating and assigned a target price of $50. Shares closed at $43.32 ahead of this call, in 52-week range of $28.42 to $77.86. The consensus target price is $51.68. Foot Locker has a dividend yield of 3.2%. While Credit Suisse sees volatile same-store sales continuing in the first half of 2018, it thinks investors are being paid to wait for what should be improving trends in the second half of 2018.

Ulta Beauty Inc. (NASDAQ: ULTA) was started with an Outperform rating and assigned a target price of $245. It previously closed at $207.62 and has a 52-week range of $187.96 to $314.86. The consensus target price is $264.50. Despite a big stock pullback, Credit Suisse sees this as being a top retail growth story and that the bears targeting margins has become very overblown.

Ralph Lauren Corp. (NYSE: RL) was started as Outperform with a $125 price target. The stock closed at $107.48 ahead of the call, and it has a consensus target price of just $110.46. Ralph Lauren has almost a 2% dividend yield. The company is viewed as a having a solid stock backdrop during the “catch-up” trade when the brand returns from deeply negative trends.

VF Corp. (NYSE: VFC) was started with an Outperform rating and assigned a target price of $85. It closed at $73.21 a share ahead of the call and has a consensus target price of $81.44. The yield is close to 2.5%. The company is seen as having one of the strongest portfolio of brands that can combat ongoing softline challenges.

Tapestry Inc. (NYSE: TPR), the company formerly known as Coach, was started with an Outperform rating and assigned a target price of $60. Tapestry closed at $52.46 ahead of the call, and it has a consensus target price of just $53.24. Its dividend yield is roughly 2.5%. Credit Suisse noted that Tapestry has executed its Coach brand quality of sales plan, and also it was noted as removing Kate from a brand-dilutive distribution and closing 100 to 125 stores while it has lowered its Americas wholesale by 25% from the peak.

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