MALCOLM LOWENTHAL
FIRST VICE PRESIDENT
KERN, SUSLOW SECURITIES

COMPANY: Elizabeth Arden Inc.
SYMBOL: RDEN (Nasdaq)
PRICE:$19.92 (as of Tuesday)
52-WK RANGE: $18.28-$26.50
MARKET CAPITALIZATION: $587.36 million

Elizabeth Arden manufactures, markets, and distributes fragrances, cosmetics, and skin care products. Malcolm Lowenthal is the first vice president of Kern, Suslow Securities, and has more than 40 years of investment experience working with both private and institutional clients. He spoke with of The New York Sun about why he believes Elizabeth Arden is a compelling investment.

Why Elizabeth Arden?

The company has a couple new product lines, which look like they could be very exciting. If they succeed, the company will far exceed analysts’ earnings estimates. And if they don’t, I think the company will be well placed for a merger or a buyout. Either way, shareholders should come out ahead.

What are the new products?

The company has agreements in place to sell the Hillary Duff and Britney Spears lines of cosmetics. More important, they have Prevage, a revolutionary anti-wrinkle product developed in partnership with Allergan [the makers of Botox].That stuff has the potential to be a huge seller for the company. And if it is, they’ll beat the hell out of Wall Street estimates.

Why now?

The market has been relatively stable lately, but I think this year might be a difficult one. I’m looking for stocks with something special going for them. A product like Prevage gives RDEN an edge. As an anti-wrinkle cream, it’s geared, to some extent, toward an older demographic, and that is exactly RDEN’s core market. The company has a high name value and a good reputation among its target clientele. Prevage won’t just be another product – it will speak directly to RDEN’s customer base.

Sounds good – so what’s the catch?

In my opinion, I believe the chance of success (for Prevage) is greater than 50-50. If it doesn’t do as well as I think it will, and if the company doesn’t get bought out, I still think RDEN is a fair value at about $20.

What about the fundamentals – do they stack up?

Yes, definitely. They have a strong balance sheet, they’re buying back some of their own stock this year, they’re supposed to earn about $1.30 per share – and at that level, and in this market, you’re not overpaying for the stock. And that’s the point, you’re not overpaying even if nothing really happens.