RBC Capital starts Jimmy Choo at 'outperform'

9th Sep 2015 11:53

(ShareCast News) - RBC Capital Markets has initiated coverage of Jimmy Choo at 'outperform' with a 200p price target."Jimmy Choo's footwear-focused model is attractive given the early stage of brand development and the defensiveness of the product category on a long term view," the Canadian bank said.It said 10-15 new stores per year, largely in Asia, an expanding menswear business and omni-channel integration position the group to grow revenue and earnings before interest and tax by a 10% compound annual growth rate to full-year 2020.The bank also highlighted franchise conversions as a potential source of future revenue and margin uplift.It noted the stock trades at 22x 2016 estimates, which is a 25% premium to sector and in the context of its €300m sales base and under-penetration in China is not excessive."The niche brand positioning (predominantly women's footwear), disciplined capital management and clear medium-term strategy sets Jimmy Choo on a sustainable path to growth, and its current valuation levels are in line with its average since IPO, providing suitable headroom for potential future re-rating."At 1211 BST, Jimmy Choo shares were down 0.6% at 157.50p.