Canada Goose Gets A Boost

Canada Goose Holdings Inc. Subordinate Voting Shares (NYSE: GOOS) reported better-than-expected second-quarter earnings that showed encouraging progress on a decision to focus on e-commerce sales.

The Analyst

Canaccord Genuity's Camilo Lyon.

The Rating

Lyon maintains a Buy rating on Canada Goose's Toronto-listed stock with an unchanged C$34 price target. (See Lyon's track record here.) 

The Thesis

Canada Goose's earnings report was "superb," with a broad-based beat across many metrics, including sales, gross margin, and SG&A, Lyon said in a Thursday note. Encouragingly, wholesale sales rose 24 percent in the quarter, exceeding the analyst's 14-percent growth estimate due to a pull-forward of demand. Direct-to-consumer revenue surged 269 percent in the quarter, which handily topped Lyon's estimate of 172 percent growth.

The Canadian company's earnings report signals the true strength of the brand and "commensurately strong" sell-through rates at retail, especially at a time when weather trends weren't favorable, according to Canaccord Genuity.

The launch of new product lines in the quarter such as knitwear shows that Canada Goose is "executing at a high leve," making the stock "the best retail growth story" among Lyon's coverage, he said. 

Price Action

Shares of Canada Goose gained more than 11 percent Thursday morning and hit a new 52-week high of $25.30.

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