In a report released yesterday, Ike Boruchow from Wells Fargo maintained a Buy rating on Capri Holdings (CPRI – Research Report), with a price target of $30.00.
Ike Boruchow has given his Buy rating due to a combination of factors surrounding Capri Holdings’ strategic moves and potential financial improvements. The speculation around the sale of Versace, a luxury asset of Capri Holdings, to Prada for approximately $1.6 billion is a significant driver of this positive outlook. This potential sale price is notably higher than previous estimates, suggesting a substantial value unlock for equity holders.
Such a transaction would considerably reduce Capri Holdings’ leverage, as the proceeds could eliminate the company’s net debt, which stood at $1.5 billion as of the third quarter. Additionally, the remaining business, consisting of Michael Kors and Jimmy Choo, would be left with a healthier balance sheet and potential for future growth. Despite some of the news being partially priced in, the deal’s completion could still create immediate value for shareholders, making the stock an attractive buy according to Boruchow’s analysis.