The premium accessories maker Michael Kors Holdings Ltd (NYSE:KORS) has seen an unprecedented rise of 309 % in its stock price since its IPO in December, 2011. The stock of the company, which was in perpetual rise till about three months ago, has been underperforming the market in last few weeks, leaving many on Wall Street to wonder if the Kros bubble has finally burst. Billionaire Stephen Mandel is one of the backers of the stock, with a $843 million position at the end of the first quarter.
Analysts at Barclays recently decreased their price target on shares of Michael Kors Holdings (NYSE:KORS) from $85.00 to $82.00. Speaking to CNBC, Joan Payson of Barclays said, “it may be you know shift in relevance or preference. At the same time something else we have been tracking to date has been market share in North America for this brand and we really see them as having 18% markets share in North American handbag at this point. 20% is really the threshold where we will begin to be concerned that they are beginning to demonstrate a saturation point in the market”.
Ms. Payson also revealed that the Google Trends U.S. search data for the term ‘Michael Kors’ have declined year-on-year for five consecutive weeks, there has only been 1 other week of decline in this metric since the company went public.
Citigroup Inc (NYSE:C), William Blair, Sterne Agee and other firms have also raised concerns on Kors this week owing to saturation in market share, higher levels of inventory and compressed margins.
Not everyone on the street is bearish on Michael Kors Holdings Ltd (NYSE:KORS) though. Talking on CNBC’s Nightly Business Report, Erin Murphy of Piper Jaffray explained her continuing overweight rating on the stock, “this continues to be a global growth story that we think is grossly misunderstood by the street. It’s growing across multiple categories. We think over the next two to three years, the near term or that kind of immediate term upside really comes from the European market, what they are doing their it’s extremely transformational”.