Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>Many of the companies that participated in our recent Consumer Products Virtual Investor Conference have been working hard in righting the ship following the post- pandemic hangover that a lot of consumer names have suffered through.</li><li>There were several new management teams with new strategies, and a lot of talk about inflection points.</li><li>Vera Bradley’s CEO, CFO, and CMO have each been there for less than two years, and the company is about to roll out its Project Restoration strategic initiatives next month, which management believes will take the company into the third major stage of its lifecycle.</li></ul>

Many of the companies that participated in our recent Consumer Products Virtual Investor Conference have been working hard in righting the ship following the post- pandemic hangover that a lot of consumer names have suffered through.There were several new management teams with new strategies, and a lot of talk about inflection points.Vera Bradley’s CEO, CFO, and CMO have each been there for less than two years, and the company is about to roll out its Project Restoration strategic initiatives next month, which management believes will take the company into the third major stage of its lifecycle.

Consumer Products Conference Recap - June 20, 2024

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The broad equity market has been on an absolute tear since we discussed in our 10/31/23 Compass how risk/reward favored buyers as key supports were being tested on SPX/QQQ/IWM</li>
<li>Furthermore, we discussed in our 11/7/23 Compass our belief that this was more than just another counter-trend rally, and that it is likely the start of a significant year-end rally.</li>
<li>Bullish developments have only continued; among them includes 3.5-month downtrend reversals on the S&amp;P 500 and QQQ. We expect more upside into year-end and beyond.</li>
</ul>


The broad equity market has been on an absolute tear since we discussed in our 10/31/23 Compass how risk/reward favored buyers as key supports were being tested on SPX/QQQ/IWM
Furthermore, we discussed in our 11/7/23 Compass our belief that this was more than just another counter-trend rally, and that it is likely the start of a significant year-end rally.
Bullish developments have only continued; among them includes 3.5-month downtrend reversals on the S&amp;P 500 and QQQ. We expect more upside into year-end and beyond.


Year-End Rally to Continue?; Riding the Trend Higher; Buys in Education Services and Retailers

US Treasury (10 Yr Generic) / Technical Analysis

Market dynamics remain largely bullish and we continue to see signs of improving risk appetites. As a result, we are on the verge of shifting to an outright bullish stance. High yield spreads hit new 2021 narrows on Friday as they moved to 14-year lows. Additionally, defensive areas including Staples (XLP), Utilities (XLU), and Gold (GLD) are breaking to new 2021 RS lows.

Market dynamics remain largely bullish and we continue to see signs of improving risk appetites. As a result, we are on the verge of shifting to an outright bullish stance. High yield spreads hit new 2021 narrows on Friday as they moved to 14-year lows. Additionally, defensive areas including Staples (XLP), Utilities (XLU), and Gold (GLD) are breaking to new 2021 RS lows.

U.S. Equity Strategy: Downgrading Consumer Staples To Underweight; Watching 10-Year Yield Closely

Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

<ul><li>We are reiterating our Hold rating and projections for Vera Bradley after visiting stores in Connecticut, Long Island and New Jersey.</li><li>Driven by new silhouettes (XL backpacks), a focus on core colors (black and navy) and strong demand for backpacks and lunch boxes, the back-to-school season was a positive, and demonstrated the brands continued relevance to a younger customer base.</li><li>Post the season, in what is normally a period of a slight lull before the start of Holiday shopping, Vera Bradley focused on maintaining momentum in the outlets with an early launch of key Fall and Holiday patterns, while the main line stores reloaded and set up for the Holiday collection for October.</li></ul>

We are reiterating our Hold rating and projections for Vera Bradley after visiting stores in Connecticut, Long Island and New Jersey.Driven by new silhouettes (XL backpacks), a focus on core colors (black and navy) and strong demand for backpacks and lunch boxes, the back-to-school season was a positive, and demonstrated the brands continued relevance to a younger customer base.Post the season, in what is normally a period of a slight lull before the start of Holiday shopping, Vera Bradley focused on maintaining momentum in the outlets with an early launch of key Fall and Holiday patterns, while the main line stores reloaded and set up for the Holiday collection for October.

VRA: Snapping the Store: After Solid B-to-S, Taking Next Steps for Fall

<ul><li>We are reiterating our Hold rating on Vera Bradley and slightly reducing our projections for 2HFY26 and FY27 after the company released 2QFY26 (July) results which were below expectations on the top line but materially better on the EBITDA and bottom lines, as the company was able to leverage some key product wins against very easy comparisons (expectations).</li><li>More importantly, new management laid out their five pillars to revive the Vera Bradley, including: 1) sharpening the brand, 2) a true omnichannel experience, 3) outlet 2.0; 4) operations focus and 5) re-imagining how Vera Bradley works.</li><li>Management believes these shifts will reposition the brand to re-attract older customers and position Vera Bradley for new generations, along with a return to higher overall profitability and consistent top line growth.</li></ul>

We are reiterating our Hold rating on Vera Bradley and slightly reducing our projections for 2HFY26 and FY27 after the company released 2QFY26 (July) results which were below expectations on the top line but materially better on the EBITDA and bottom lines, as the company was able to leverage some key product wins against very easy comparisons (expectations).More importantly, new management laid out their five pillars to revive the Vera Bradley, including: 1) sharpening the brand, 2) a true omnichannel experience, 3) outlet 2.0; 4) operations focus and 5) re-imagining how Vera Bradley works.Management believes these shifts will reposition the brand to re-attract older customers and position Vera Bradley for new generations, along with a return to higher overall profitability and consistent top line growth.

VRA; 2Q Review: Plotting the Revival; Reiterate Hold and Remain Guarded NT

United States

Vera Bradley, Inc. designs, produces and retails fashion accessories for women. The Company markets handbags, accessories and travel and leisure items through its chain of retail stores and independent retailers.

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Vera Bradley (VRA US)

Consumer Products Conference Recap - June 20, 2024

Many of the companies that participated in our recent Consumer Products Virtual Investor Conference have been working hard in righting the ship...

Water Tower Research

Year-End Rally to Continue?; Riding the Trend Higher; Buys in Education Services and Retailers

10/31/23 we discussed how risk/reward favored buyers as key $SPX $QQQ $IWM supports were being tested. 11/7/23 we argued it was MORE than just...

Vermilion Research

U.S. Equity Strategy: Downgrading Consumer Staples To Underweight; Watching 10-Year Yield Closely

Market dynamics remain largely bullish and we continue to see signs of improving risk appetites. As a result, we are on the verge of shifting to an...

Vermilion Research

VRA: Snapping the Store: After Solid B-to-S, Taking Next Steps for Fall

We are reiterating our Hold rating and projections for Vera Bradley after visiting stores in Connecticut, Long Island and New Jersey. Driven by...

Small Cap Consumer Research

VRA; 2Q Review: Plotting the Revival; Reiterate Hold and Remain Guarded NT

We are reiterating our Hold rating on Vera Bradley and slightly reducing our projections for 2HFY26 and FY27 after the company released 2QFY26...

Small Cap Consumer Research

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