MT Insider: Barclays Says Still Too Early For Chico's to Drive Comp Growth, Initiates at Equal-weight and $19 PT

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Barclays is initiating coverage of Chico's FAS ( CHS ) with an Equal Weight rating and price target of $19.

As a backdrop, the company is a leading women's specialty apparel retailer and in the beginning stages of international expansion.

According to the report, the largest driver of growth over the intermediate term is Soma, and the analyst forecasts approximately $500 million in incremental revenue over the next five years.

While Soma faces minimal direct competition, the biggest challenge has been brand awareness given that it focuses on a more mature consumer. Currently, it is well known that the industry leader is Victoria's Secret, which is owned by L Brands ( LTD ).

Bottom line, Barclays believes that it is still too early for CHS' initiatives to drive total company growth, as evidenced by negative comps year to date. It is also worth noting that comparisons remain challenging in the second half of 2013.

Valuation is fair, and shares of Chico's FAS are trading in line with its 4 year historical range. Longer term, there is more potential for upside if the company's branding and e-commerce initiatives bear fruit in addition to global expansion.

CHS 16.66 0.00 0.00

LTD 61.10 0.00 0.00



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.

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This article appears in: Investing , Commodities

Referenced Stocks: CHS , LTD

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