Roots Corporation Receives a Buy from Canaccord Genuity

By Carrie Williams

Wall Street analyst has provided a review for the NA company today, but retained the same rating on the stock. Analyst Camilo Lyon from Canaccord Genuity reiterated a Buy rating on Roots Corporation (TSX: ROOT), with a C$14 price target.

Lyon said:

“We are positive on ROOT ahead of its FQ4 results on Wednesday, April 18 BMO as we believe the 10% comp momentum from Q3 carried into Q4. Our 52c consensus EPS estimate is based on comp growth of 10.1% and 57.9% gross margin. Recall, store traffic was trending positive at the time management presented at the ICR conference in January, which speaks to the brand’s strong connection with its consumers. Consistent with its performance all year, we expect Q4 gross margin expansion to be driven by fewer promotional days during the quarter. In addition, the company reduced its SKU count by ~26% in Q4 by editing out unproductive SKUs, thus improving its product costing on higher volume purchases of fewer SKUs to the benefit of margins. Overall, we see ROOT entering 2018 in a strong position to continue driving both sales productivity gains and gross margin expansion via its UBR (united brand range) initiatives. With the stock down ~10% YTD, we believe strong Q4 results coupled with a favorable outlook fueled by product/category extensions, an enhanced consumer experience store strategy, digital, and international growth opportunities should warrant renewed interest in the stock. We reiterate our BUY rating and C$14 PT.”

According to TipRanks.com, Lyon is a 1-star analyst with an average return of -0.8% and a 47.6% success rate. Lyon covers the Consumer Goods sector, focusing on stocks such as Columbia Sportswear, Sequential Brands, and Deckers Outdoor.

Currently, the analyst consensus on Roots Corporation is Moderate Buy and the average price target is C$14, representing a 35.9% upside.

In a report issued on April 6, BMO Capital also reiterated a Buy rating on the stock with a C$14 price target.

The company has a one-year high of C$12.28 and a one-year low of C$8.55. Currently, Roots Corporation has an average volume of 87.74K.

Roots Corp. is an e-commerce company. It engages in selling apparels, leather goods, accessories and home furnishings under the brand name Roots. The company was founded in 1973 by Don Green and Michael Budman and is headquartered in Toronto, Canada.

The company’s shares closed on Tuesday at C$10.30.