Lehman Starts Oakley as Buy

Analyst Robert Drbul says the brand remains strong as the company maintains leading market share

Lehman Brothers started coverage of Oakley (OO ), the consumer products maker known for its eyewear, with a buy rating.

Analyst Robert Drbul says he believes that the Oakley brand remains strong as the company maintains the leading 9% market share in the $1.7 billion U.S. wholesale sunglass market. He adds that during the third quarter, revenue from new categories such as footwear, apparel, watches and prescription eyewear increased 79.9% to $33.2 million, accounting for 28% of gross revenue. He notes that sales to the Sunglass Hut declined 91% in the third quarter, illustrating the transition resulting from Luxottica Group's acquisition of Oakley's largest customer in April. Oakley, employing a variety of strategies to resolve distribution concerns, is continuing the brand's momentum, he says. He set a $14 12-month target.