Iconix Upped to Neutral - Analyst Blog


We are upgrading our recommendation on Iconix Brand Group ( ICON ) to Neutral from Underperform, following the solid fiscal 2012 second quarter results.

The second quarter earnings of 45 cents per share beat the Zacks Consensus Estimate by 12.5% as well as the prior-year quarter earnings by 4.7%. Revenues went up 5% primarily driven by strong performance of brands like Mudd, Bongo, Charisma and London Fog, Peanuts. New product launches also benefited revenues.

Moreover, Iconix has a diversified portfolio of brands. It builds its brand portfolio by acquiring new brands, entering into joint ventures or other partnerships, each of which enhances the company's brand management expertise and existing infrastructure.

Iconix also has direct-to-retail agreements with several retail giants, like Walmart Stores ( WMT ), Target Corp ( TGT ), Kohl's Corp ( KSS ) and Macy's Inc. ( M ). Iconix makes use of the brand name of these retail giants as well as their floor space. In Europe, Iconix launched two direct-to-retail partnerships, Material Girl with Otto and Ocean Pacific with UK-based SportsDirect, during the second quarter.

Also, the company has been expanding in the emerging markets. Iconix expects to expand its China's retail partners to 500 by the end of 2012. In the second quarter of 2012, Iconix entered into a joint venture (JV) with Reliance Brands in India. According to the JV, Reliance brands will own the fashion and home brands from the Iconix portfolio in India, including Ed Hardy, Mossimo, London Fog and Ocean Pacific.

However, unfavorable currency translations and competition from peers are matters of concern.

Currently, Iconix, which competes with Guess' Inc. ( GES ) and Hanesbrands Inc. ( HBI ), holds a Zacks #2 Rank, which implies a short-term Buy rating.

GUESS INC (GES): Free Stock Analysis Report
HANESBRANDS INC (HBI): Free Stock Analysis Report

ICONIX BRAND GP (ICON): Free Stock Analysis Report
KOHLS CORP (KSS): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: GES , HBI , ICON , KSS , M



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