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Vera Bradley Sets Up To Reposition Its Brand Following Q2 EPS Beat

Vera Bradley, Inc. NASDAQ:VRA - Vera Bradley Sets Up To Reposition Its Brand Following Q2 EPS Beat

Baird Equity Research maintains its Neutral rating on Vera Bradley, Inc. VRA 1.56% shares. Analysts Mark Altschwager and Drew North also retained their target price of $18 on the company's stock.

The brokerage pointed out that the second-quarter results represented a disciplined SG&A apart from the inventory management despite incremental headwinds on gross margin. However, the lead analyst sees the biggest factor is the brand's repositioning next year.

Baird is encouraged by the big branding initiatives, which are in the early weeks. However, the analyst is worried as to what would happen if Vera Bradley's efforts failed to transform into comps gain at the speed the company expects. That would mean risk to estimates.

Related Link: For Vera Bradley, Cowen Says Q4 Could Be The Moment Of Truth

"In recent years management has vastly improved the product assortment, in-store merchandising, and overall operations yet meaningful top-line improvement has been slower to develop due to lower awareness among traditionally under-penetrated demographic groups (25–35 year-old women)," the lead analyst wrote in a note to clients.

The brokerage expects the second half of the next year to show brand transformation impact, including a refreshed assortment of product, fresh SoHo flagship, store refreshes, a new portal and a complete marketing tactics. In all, the analyst pointed out that the management sees gaining 600 bp comp inflection by the fourth quarter.

While trimming its next two year's EPS projections from $0.94 to $0.90 and $1.03 to $1.00 respectively, the brokerage believes that the long-term growth path is intact though clouds surround the near-term visibility.

On Friday, the stock shed $0.02, or 0.12 percent, to $16.63.

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Apr 2016Cowen & CompanyMaintainsMarket Perform
Mar 2016WunderlichUpgradesHoldBuy
Jan 2016Standpoint ResearchUpgradesHoldBuy

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