(By Balachander) DSW Inc. (NYSE:DSW) shares were initiated with a "Buy" rating and price target of $65 by Brean Murray, Carret & Co (BMC), which cites stock pullback as an attractive opportunity to buy.
"We believe the recent pullback in the stock — resulting from the Street's overreaction to the release of management's 2QFY13 EPS guidance falling below consensus, but reiteration of FY13 EPS guidance (in line with Street expectations) — presents an appealing opportunity to invest in a company with an extensive value assortment and highly differentiated shopping experience," the brokerage wrote in a note.
Columbus, Ohio-based DSW operates as footwear retailer in the United States. As of May 22, 2012, it operated 336 stores in 41 states; and 341 leased departments for other retailers in the United States.
If 2Q EPS reaches the high-end of management's range, BMC believes this should be a catalyst and provide insight into 2HFY13.
As DSW focuses on strategically expanding units, tightening up execution strategies, growing existing product categories and enhancing its e-commerce platform, the brokerage believes the company will drive market-share gains and top-and bottom-line upside.
BMC views its target price of $65, which translates into 14.7 times its FY14 EPS projection of $3.75, as conservative. The brokerage would use the weakness in the stock to get more aggressive, it wrote. BMC noted DSW is down 15 percent from its 52-week high.
The stock, which has been trading between $37.29 and $61.99 over the past year, added 0.13 percent to $53.27 in early trade on Wednesday.