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Oppenheimer Reiterates Elizabeth Arden (RDEN) As 'Outperform', $44 PT

 March 27, 2012 11:16 AM

Oppenheimer & Co. analyst Joseph Altobello reiterated his "Outperform" rating and $44 price target on shares of Elizabeth Arden Inc. (NASDAQ:RDEN) after a meeting with the management.

Altobello was encouraged by meeting with RDEN management Monday which provided additional details into the company's plans for its Elizabeth Arden brand repositioning. Importantly, he views this as a key growth driver, and one that is not fully reflected in the shares, which have underperformed of late despite continued core business strength.

Elizabeth Arden hosted an upbeat meeting for sell-side analysts at its offices in New York City Monday afternoon, the purpose of which was to provide greater insight into the company's repositioning strategy for its flagship Elizabeth Arden brand. This includes new products, packaging and marketing.

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Altobello said planning for the repositioning began about 18 months ago as a means to re-establish the brand's prestige and luxury image. Recall that this is RDEN's largest brand, and management has set a goal of doubling its size over the next 3-4 years with the help of the repositioning.

The repositioning technically began with the re-launch of the Red Door fragrance last fall, although the first new product is set to launch in May. Also, the new packaging and new products will be worked through the entire retail platform on a replenishment basis over the next few quarters.

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By September, between 50 and 60 flagship Elizabeth Arden retail counters around the world will be fully transformed to represent the new luxury image. After the holiday season, management will reevaluate these doors to assess the next stage of the rollout.

Importantly, Altobello believes the stock's recent underperformance is unwarranted, as RDEN appears well positioned to benefit from a meaningful pipeline fill in fiscal 2013 and he is comfortable with his above-consensus EPS estimate.

The brokerage maintained its 2012 EPS estimate for RDEN of $2.00 and its 2013 estimate of $2.50.

Elizabeth Arden, a beauty products company, engages in the manufacture, distribution, marketing, and sale of fragrances, skin care, and cosmetic products to retailers and other outlets worldwide.

RDEN is trading down 0.22% at $36.44 on Tuesday.

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