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New Stock Coverage: Michael Kors Makes Its Mark


Wall Street ratings agencies set the tone for today's stock market.

Sweetie darling, life is absolutely fabulous for fashion firm Michael Kors Holdings Limited (NYSE:KORS) at the moment. Not that there's ever any cattiness on the catwalk, but the apparel outfit will have immensely enjoyed yesterday's 9.34% nosedive that its archrival Coach (NYSE:COH) took. While the latter stock, downgraded this morning, is still suffering, Kors continues to catch a wave. Our regular readers need no introduction to this stock, and today it's begun with a bullish buy rating. The analyst hails lucrative licensing opportunities and sustainable 20% to 25% top-line growth, among other catalysts.
Sometimes it's not the headline-hoggers but rather stories buried deep inside a publication that prove most illuminating. Even Michael Kors would admit that the Wall Street Journal isn't exactly known for being a quality clotheshorse, yet its recent snippet about the return of the miniskirt has predictably presaged another bull run. After all, a rising hemline index has always been a big turn-on for Mr. Market. Thus did the Dow (INDEXDJX:.DJI) nix all doubters by advancing 86, as blue chips and the S&P 500 (INDEXSP:.INX) both belatedly turned positive in April on Tuesday. Amazon woman Gisele Bündchen certainly has the legs for a micro-mini but instead opted for much more demure ankle-length dresses in her ads for Banco do Brasil (OTCMKTS:BDORY). No matter -- its stock clearly has nothing to hide after gaining 2.79%. The supermodel still outearns her Ugg-endorsing husband. It must now be a mighty close-run thing, however, after Tom Brady's beloved Deckers Outdoor (NASDAQ:DECK) rose again. Theirs is the most handsome home in America, but the country's homeownership rate just dropped to its lowest level since 1995. (And this is a bad thing why, exactly?)
We are, of course, currently in the biggest initial public offering boom since the Clinton era, and yesterday, recent debutante GrubHub (NYSE:GRUB) ended up 0.46% after attracting its first analyst initiations. I interviewed Stuart Varney from FOX Business Network and asked him if the current IPO mania carries any ominous echoes of the market's millennial madness. He had no hesitation in saying, "There is no comparison between the dot-com bubble events of the late 1990s and this recent rash of IPOs. Fifteen years ago, many of the firms coming to market had nothing behind them and thus subsequently failed. Those now going public are all established and well-run. Watch out for Alibaba. It will be the biggest and most important IPO since Facebook." Speaking of Alibaba, you can read Minyanville's assessment of it here.
This afternoon in economics, the Federal Open Market Committee finishes its 48-hour policy meeting at 2:00 p.m. EDT. On the earnings front, International Paper (NYSE:IP), MetLife (NYSE:MET), and Yelp Inc. (NYSE:YELP) all release results.
Now let's turn to this morning's new stock coverage, which includes an insurance outfit in addition to our aforementioned Michael Kors.

AFLAC (NYSE:AFL): Keefe Bruyette covers the insurance firm famous for its duck with a Market Perform rating. Its price objective is $69.
Covance (NYSE:CVD): The medical laboratory company is resumed at Outperform by Raymond James.
Mercer International (NASDAQ:MERC): Shares are launched at Outperform by Credit Suisse, whose price target is $10.
Michael Kors: Janney starts the stock, up 2.42% on Tuesday, with an upbeat Buy rating and $121 target price.

Also see:

Stock Upgrades: Don't Dare Compare Apple and Orange

Stock Downgrades:
Coach Is a Train Wreck
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No positions in stocks mentioned.
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