Must-Own Stock for Holiday Season |
As part of its broad market penetration plan, PRVCY Couture, Inc. has entered into agreements to distribute PRVCY-branded apparel and accessories in Europe and Mexico thus further expanding its network of international distributors and potential licensees. The recent deal with a Mexican distributor also includes certain production rights for the anticipated future diffusion brands owned or to be developed by the company. Creating a network of international distributors early on will be a key to international development and success, especially in Latin America where the Company’s “casual couture born in Hollywood” marketing concept is likely to be a big hit. Sales are assuredly to be boosted by the fact that Latino celebrities such as Eva Longoria and Selena Gomez, and Jennifer Lopez have been featured wearing the jeans.  The Present The PRVCY Premium brand is a very popular high-end denim brand known to be worn by a large number of top-tier celebrities in TV, movies, and music. The list includes: Kim Kardashian, Jessica Alba, Mark Wahlberg, Ashton Kutcher, Miley Cyrus, Eva Longoria, Katy Perry, and Paris Hilton. Since Omni acquired PRVCY Couture, and re-launched the denim brand, it has received rave reviews and has been followed by the license, distribution and re-launch of the famous “I Want PRVCY” t-shirt line. The Company is well-positioned to take advantage of premium denim sales this holiday season, especially via e-commerce. New distribution relationships in the U.S. and abroad should provide a boost, driving sales in the next 3-6 months. In addition, once the acquisition of Jean Genie is closed, the transaction should provide additional design and production capabilities for Omni’s flagship. The Future Omni’s strategy is to leverage the success of its flagship and engage in a roll-up of companies in the premium brand apparel space. This model should prove to provide vertical integration in design, production, and distribution. We should note that we believe the Company is positioned to emulate the success of premium denim company True Religion (NASDAQ:TRLG), which currently boasts an $800M market capitalization. Given the strength of the existing leadership, their success, capabilities and contacts, it is likely that Omni is currently enjoying the first stage in what could be hockey-stick type growth in the next 2-3 years. COMPETITIVE ADVANTAGES Omni Ventures has a number of advantages over a number of other premium apparel brands. . In addition, management is building an effective, vertically integrated, yet diverse consumer goods and services platform which should results in the addition of other, high-quality premium apparel brands.
RISK FACTORS In our view, Omni’s biggest risk is the broad penetration of the consumer market with their premium brand offerings. A related risk would be the decline in popularity in this style and trend. We deem the current risk low given the current brand recognition, popularity, and broad use by celebrities. Other risks include re-establishing the right distribution for the products, in addition to its e-commerce activities. Delays on the M&A front in the space are also a possible risk as is access to capital required to close prospective transactions. Slower sales penetration as a result of competition from larger firms or even from newer entrants is a typical concern and is also consistent with firms of Omni’s size and standing. MANAGEMENT Omni Ventures has an impressive management team, and bolstered by two new additions just last week, boasts an enviable Board of Directors as well. Paul Guez - Chairman of the Board, Director Christian A Wicks – President, Chief Financial Officer, Director J. Bernard Rice - Director In 2000 Mr. Rice orchestrated the spin-off of IBM's education content assets into Riverdeep Inc. and contributed to Riverdeep becoming the fastest growing educational software company in the nation. Today, Riverdeep has educational products in some 45,000 schools in over 20 countries. In late 2003, Mr. Rice left Riverdeep and co-founded Best Practice Networks Inc. Today Best Practice Networks is a leading innovator of easy-to-use on-line learning technology for K-12 students and adult career education students. Mr. Rice is currently also creating dedicated companies and partnerships to scale the success of these technologies. For example, he recently co-founded Educational Partners, which now markets educational software and workbooks in 20 languages for children 3 to 9 years of age. Derek Finney, Director Kendrick Kim, Director VALUATION AND CONCLUSION In our view, the timing could not be better for investors and we forecast that the stock could reach $1.25 in the next 3-6 months, as. PRVCY is poised to capture a meaningful share of the premium denim market. PRVCY benefits from the sheer number of “A-listers flaunting the jeans, which has a big impact on consumer purchase decisions. Plus, PRVCY is riding the wave in the segment led by True Religion (NASDAQ:TRLG), an $800M market cap premium jeans comp to OMVE’s stock. Thus, OMVE is must-own play for the holiday season. In addition, the overall valuation should rise via the closing of new M&A by Omni in the coming months, as it executes its vertical integration roll-up strategy. We rate these shares Speculative Buy.  Analyst: Robert Goldman Rob Goldman has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell-side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund. Analyst Certification I, Robert Goldman, hereby certify that the view expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report. Disclaimer This Opportunity Research report was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research and Goldman Opportunity Research. The Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports. It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. While stocks in the Opportunity format may have a higher risk profile, they typically offer greater upside as well. Goldman Small Cap Research has been compensated by a third party in the amount of $4,000 for a research subscription service. The Firm does not accept any equity compensation. All information contained in this report was provided by the Company. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations. The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. 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