Broker snap: Jefferies says buy under-appreciated TED

30th Oct 2013 12:19

Fashion retailer Ted Baker (TED) has been identified as a buying opportunity by the retail sector analyst team at broker Jefferies, ahead of what they predict will be a 'solid' third quarter update in mid-November.The recent 15% stock derating in the shares "ignores the ability for TED's international divisions to compensate for any weather-related slowdown in the UK and to continue to drive medium-term topline growth" says the team, which remain fans of the FTSE 250 group's "consistent delivery" and "high-quality" earnings."There has been no change in the outlook for TED since the interims in early October, so the share weakness represents a good buying opportunity, in our view." The Camden-headquartered company now trades at a sizeable discount to its peers on a price-earnings growth (PEG) basis, with its 1.0 times three year adjusted PEG comparing to 1.4 times for a selected comparable basket of international peers with double-digit top-line and earnings profiles.Jefferies retail analysts said they expect TED to report a solid third-quarter update on November 14th, with expected group revenue growth of circa 10% that takes into account the strong comparable period, phasing of wholesale sales and unseasonably warm weather to the start of autumn/winter season in the UK. "The recent weakness in the stock overlooks the resilience of the UK business and increasingly compelling international potential - now 30% of group revenue. We see the recent circa 15% derating as an opportunity."OH