Citing above-average growth potential, a unique and low-cost retail footprint, solid free cash flow for reinvestment or dividends and potential for returns to shareholders through monetization of real estate, analysts Tal Woolley and Irene Nattel set a price target of $ 21.
They also pointed to strong management under CEO Richard Baker and president Bonnie Brooks, stable gross margins in the 40 per cent range and forecasted EBITDA growth of 35 per cent in 2013 and 18 per cent in 2014.
RBC Capital Markets helped lead the syndicate of underwriters that handled the HBC IPO in November.
She said HBC still has challenges to meet before American department store retailer Nordstrom arrives in 2014, including updating some of the smaller stores and improving customer service. “It’s a race against time. It will be interesting to see.”
Evans pointed out that Brooks has experience competing with Nordstrom in the U.S., with Lord & Taylor. And Nordstrom, which differentiates itself on customer service, isn’t able to meet that target in every store all the time.
“Generally I have to say I like them, but they’re not all great,” said Evans.