- Citi initiates on Oroton With Neutral rating
- Stockbroker sees stock as fair value at present
- Asia offers upside potential but some time away
- Only non-Buy recommendation in FNArena database

By Chris Shaw

Prior to today, luxury goods retailer OrotonGroup ((ORL)) was rated as a Buy by all four brokers in the FNArena database to cover the stock. All were attracted to a combination of a strong balance sheet, the potential for Asian expansion to boost group earnings and a solid on-line product offering that put the stock among the top of the retail offerings.

Citi has initiated coverage with a slightly less positive view, rating Oroton as Neutral with a price target of $8.30. This brings the consensus price target for Oroton according to the database to $8.91, down from $9.07 previously.

Citi's Neutral rating is despite a solid earnings growth outlook, the broker forecasting earnings per share (EPS) growth for Oroton of 11% in FY12 and 7% in FY13. Citi's EPS forecasts stand at 67.4c and 72.1c respectively, which compares to consensus EPS estimates of 66.5c for FY12 and 73.5c for FY13.

Longer-term, Citi expects Oroton can deliver 44% sales growth over the next five years. Almost half of this is expected to come from the introduction of more fashion products at higher price points.