BofA ML upgrades Jimmy Choo to 'buy'

(ShareCast News) - Jimmy Choo got a boost on Friday as Bank of America Merrill Lynch upped the stock to 'buy' from 'neutral' and lifted the price target to 150p from 130p.It pointed out that although the stock offers the highest estimated earnings growth in the luxury sector, it trades at a 30% discount to peers, having de-rated by 25% year-to-date due to an uncertain environment and low liquidity in the stock."We have greater confidence in the group's LFL recovery in H2, as initiatives in the challenging US market are bearing fruit - confirmed by management at our Global Consumer Conference."Margin expansion should therefore accelerate in H2 placing it firmly back on track to reach its mid-term targets as the group unlocks its growth opportunities."The bank said the Jimmy Choo brand still has scope to increase its directly operated store network by at least 30% primarily driven by Asia and to penetrate men's shoes.It forecasts 120 basis points of earnings before interest and tax margin expansion over 2016-20E as the group benefits from increasing retail mix, scale and operating leverage.BofA said there is 7% incremental upside to its 2020 earnings per share estimate if mid-term targets are reached by then.At 0900 BST, the shares were up 3.3% to 125p.