Canada Goose stock rating raised to Hold at Williams Trading

On Monday, Williams Trading analyst Sam Poser upgraded Canada Goose shares (NYSE: GOOS) from Sell to Hold amid a broader reassessment of the firm’s coverage in the footwear and apparel sector. The company, which maintains impressive gross profit margins of 68% and is currently trading at a P/E ratio of 14.7, appears undervalued according to InvestingPro analysis. Poser cited the new tariffs’ impact on industry margins, pricing, and demand as the primary reasons for the changes in ratings and price targets for several companies.

Williams Trading now expects a lower average price-to-earnings (P/E) multiple by 20.4% across the companies it covers. In addition to Canada Goose’s upgrade, the firm downgraded Dick’s Sporting Goods (NYSE:DKS) and Shoe Carnival (NASDAQ:SCVL) from Buy to Hold, and Steven Madden (NASDAQ:SHOO) from Hold to Sell. The firm also revised estimates and price targets for all companies in its coverage. InvestingPro data shows Canada Goose maintains a strong financial health score and healthy liquidity with a current ratio of 2.01, suggesting resilience in challenging market conditions.

The uncertainty caused by the additional 145% tariff on goods from China has led to a freeze in product shipments to the U.S., which is particularly challenging for brands dependent on Chinese manufacturing and with significant sales in the U.S. This situation, according to Poser, has also led to expectations of high inventory levels in mid-2025 as companies rush to import goods ahead of a potential tariff increase after the 90-day reprieve, which does not apply to products from China.

The overall footwear industry is facing difficulties with future planning due to the tariffs, and retailers are waiting on decisions from brands before making further purchasing choices. Poser emphasized that demand planning is crucial and that risks to demand are growing alongside the likelihood of increased inflation.

Poser pointed out that while the current tariff threats differ from those experienced during the Covid era, adjusting inventory levels in anticipation of softer sales trends is a strategy that could protect margins, as it did in 2021 and 2022. He noted that chasing demand continues to be profitable.

In the midst of these challenges, Poser highlighted that Birkenstock (NYSE:BIRK), Hoka, On, and UGG are well-positioned due to their desirable products and scarcity models. Additionally, Skechers is considered well-positioned thanks to its compelling value product offerings and a supply chain that is regarded as best in class.

In other recent news, Canada Goose has reported a mixed set of financial results for the third quarter of fiscal year 2025. The company’s earnings per share (EPS) came in at CAD1.51, aligning with consensus estimates, while revenue was slightly below expectations at CAD608 million. Barclays (LON:BARC) analysts have downgraded Canada Goose’s stock rating from Equal Weight to Underweight, citing challenges such as global macroeconomic pressures and increased competition. They have also lowered the price target from $10.00 to $8.00, reflecting a cautious outlook on the company’s future performance. Meanwhile, CFRA has raised the price target for Canada Goose from $10.00 to $11.00 but maintained a Hold rating, noting a valuation below the company’s average forward price-to-earnings multiple. Raymond (NSE:RYMD) James continues to rate the stock as Market Perform, emphasizing the need for consistent performance and better expense management. In a related development, Perfect Moment Ltd. has expanded its team by hiring several former Canada Goose executives, aiming to boost its growth in the luxury outerwear market. These recent developments highlight the ongoing challenges and strategic shifts facing Canada Goose in a competitive landscape.

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