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On Monday, BofA Securities reinstated coverage on Capri Holdings (NYSE:CPRI), assigning a Neutral rating to the company’s stock with a price target set at $23.00. The firm’s analysis indicates concerns over the brand’s recent performance, noting sales and earnings have declined for nine consecutive quarters. Additionally, Capri’s EBIT margin hit a record low of 2.2% for the fiscal year 2025 estimate (F25E). According to InvestingPro data, the company’s revenue has declined by 12.34% over the last twelve months, with the stock price falling over 53% in the past year. InvestingPro analysis suggests the stock is currently slightly overvalued relative to its Fair Value.
The report from BofA Securities highlights that management at Capri Holdings is anticipating a return to sales growth in the fiscal year 2027, despite expectations for the fiscal year 2026 to remain challenging with a projected 7% year-over-year decline in sales. This forecast is based on the assumption that strategic initiatives currently underway will begin to positively impact the company’s performance. Despite current challenges, InvestingPro data reveals the company maintains impressive gross profit margins of nearly 64%, suggesting strong pricing power. Subscribers can access 12 additional ProTips and comprehensive financial metrics to better evaluate Capri’s turnaround potential.
Despite the anticipated challenges in the near term, there is a perspective within BofA Securities that Capri Holdings could potentially rebound from its current low sales and margin levels. This potential for recovery is considered a mitigating factor against the more immediate concerns regarding the company’s financial health.
In the detailed analysis provided by BofA Securities, it is evident that Capri Holdings is experiencing a critical period. The company is implementing strategic measures aimed at revitalizing its brands and returning to a growth trajectory in the coming years.
The BofA Securities report concludes with a neutral stance on Capri Holdings, reflecting a cautious outlook balanced by the possibility of a future recovery. The price target of $23.00 is based on an 11x EV/EBITDA multiple for the fiscal year 2027 estimate, representing the firm’s valuation of the company in light of the current challenges and potential for improvement.
In other recent news, Capri Holdings has been maintaining a steady presence in the market despite some recent challenges. Bernstein analysts have held their Market Perform rating for the company following predictions of negative sales growth and low single-digit percentage margins for another year. The company’s management is reevaluating its strategy, shifting gears to expand its presence in the wholesale market and targeting a wider audience of shoppers.
Capri Holdings’ Q4 earnings missed analyst expectations with an 11.6% YoY drop in revenue to $1.26 billion and adjusted earnings per share of $0.45, falling short of the anticipated $0.68. All brands under the company’s umbrella, including Versace, Jimmy Choo, and Michael Kors, experienced a decline in sales. In response to these developments, the company is projecting revenues of approximately $4.4 billion and adjusted operating income of about $100 million for fiscal 2025.
Furthermore, there is ongoing speculation about a potential divestment of Versace and possibly Jimmy Choo, which analysts from Bernstein suggest could unlock a 24% increase in value. However, they caution that the slower underlying growth may impact investor sentiment and the stock’s valuation until such a transaction occurs. These are among the recent developments surrounding Capri Holdings.
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