XCel Brands Inc (OTC: XELB) is becoming an emerging luxury licensing growth company in light of its recent purchase of two fashion labels from the privately held House of Halston LLC, an analyst said Monday.
Wunderlich's Eric Bender noted that part of the Halston deal included issuing 1.1 million shares to sellers at $9 a share.
"It's a key validation at where these shares could trade in a more liquid market," said Bender, who raised his target 20 percent to $10 a share.
XCel, with about 12 million shares outstanding, had average daily trading volume of just 326 shares in the past 30 days.
XCel, up 150 percent year-to-date, stood recently at $7, unchanged.
The company last week agreed to acquire the H by Halston and H Halston trademarks for about $18 million in cash and 1 million shares of stock.
XCel director Benjamin Malka is House of Halston's Chief Executive and a 24 percent stakeholder.
The deal also gave House of Halston warrants to purchase 750,000 XCel shares exercisable for five years at $12 a share.
The deal was partly paid for with a $10 million term loan.
XCel also inked a deal with Liberty Interactive Group's (NASDAQ: QVCA) TV shopping channel QVC to distribute the newly licensed brands.
XCel also holds licenses on the Isaac Mizrahi brand, certain rights of the Liz Claiborne New York brand and the Judith Ripka brand acquired in April 2014.
XCel brands are sold via direct-response television including QVC, Inc. and The Shopping Channel, as well as via the Internet, and traditional bricks-and-mortar retail channels.
In the recent period ended September 30, XCel sales grew 66 percent to $5 million while earnings shrank to $0.01 a share, from $0.29.
Latest Ratings for XELB
| Aug 2014 | Wunderlich | Initiates Coverage on | Buy | |
| Apr 2013 | Brean Capital | Initiates Coverage on | Buy |
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