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UPDATE 1-Wedbush starts Liz Claiborne with 'outperform'
March 1, 2012 / 6:50 PM / 6 years ago

UPDATE 1-Wedbush starts Liz Claiborne with 'outperform'

March 1 (Reuters) - Wedbush Securities started coverage of Liz Claiborne Inc LIZ.N with an “outperform” rating on Thursday, saying the clothing company’s decision to change its business model is going to pay off.

Shares of Liz Claiborne rose as much as 15 percent to their highest level in three years on Thursday, a day after the company posted lower-than-expected holiday quarter sales. [ID:nL2E8DT1L7]

In the last few years, Liz Claiborne has sold off many brands, including its namesake, to lessen its debt load but also to focus on the units in which it sees the most potential.

The owner of Juicy Couture, Lucky Brand and kate spade has transformed itself from an overleveraged, marginally cash-flow-positive business into a more appropriately leveraged and re-branded holding company, Wedbush analyst Corinna Freedman said.

“The company’s business model is at an inflection point, moving from a traditional apparel wholesale model to a global retail model focusing on high-growth categories such as accessories,” she wrote in a note to clients.

Freedman said the shares could trade to $12 over the next 12 months and see more upside over the longer term.

Liz Claiborne shares were up 11.9 percent at $10.94 on Thursday afternoon on the New York Stock Exchange, off an earlier high at $11.26.

(Reporting by Nivedita Bhattacharjee in Chicago, editing by Matthew Lewis)

((nivedita.bh@thomsonreuters.com; + 1 312 408 8726; Reuters Messaging: nivedita.bh.reuters.com@reuters.net, follow me on twitter @tweetsfromnivi)) Keywords: WEDBUSH/LIZCLAIBORNE

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