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 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.
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.
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.
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.
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.
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