Analysts Update Billabong Stock Recommendation
josh hunter
- November 03 2009
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According to Fat Prophets, Billabong International’s (ASX: BBG) current price weakness is “an attractive buying opportunity.”
“Two major variables are driving Billabong International’s (ASX: BBG) current stock price performance, both of which will prove the primary determinants of future earnings. These are of course the relative strength of the Aussie dollar and the recovery or otherwise of the retail sector, particularly in the US. Concerns on both these fronts are presently weighing on investor sentiment for the stock. Management has however done an excellent job in protecting the brand through the cycle. Indeed, the company continues to offer attractive exposure to the longer-term US recovery and we view the stock’s current price weakness as an attractive buying opportunity.”
According to the report, CEO Derek O’Neill recently commented that retail conditions in the US have “bottomed out” based on the performance of Billabong’s company owned stores.
The article adds: “The real litmus test will be whether similar strengthening becomes apparent through the core wholesale business. Given the recent strong GDP and manufacturing data coming out of the US, we believe this is likely to be the case.”
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