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On Wednesday, CFRA analyst Zachary Warring adjusted the price target for Abercrombie & Fitch (NYSE:ANF) to $152 from the previous $169 while reiterating a Strong Buy rating on the shares. The revision reflects a decrease of $17 in the 12-month price target, now pegged at a multiple of 14.5 times the firm’s fiscal year 2026 (ending January) earnings per share (EPS) estimate. This multiple is slightly below Abercrombie & Fitch’s three-year average forward price-to-earnings (P/E) ratio of 14.9x.
Warring has also reduced the fiscal year 2026 EPS estimate for Abercrombie & Fitch by $0.75, bringing it down to $10.50, while the fiscal year 2027 EPS estimate remains unchanged at $12.00. In the first quarter of fiscal year 2026, Abercrombie & Fitch reported normalized earnings of $1.59 per share compared to $2.14 in the same period last year, outperforming consensus estimates by $0.23. Revenue for the quarter was reported at $1.10 billion, exceeding expectations by $38 million and surpassing the previous year’s $1.02 billion.
The company’s performance varied by brand during the quarter, with Abercrombie revenues falling 4% year-over-year, while Hollister saw a significant rise of 22%. Comparable sales for Abercrombie dropped by 10%, in contrast to a robust 23% increase for Hollister. However, Abercrombie & Fitch’s operating margin experienced a decline, down 340 basis points year-over-year to 9.3%.
In light of these results, Abercrombie & Fitch has updated its full-year revenue outlook, now anticipating a mid-point growth of 4.5%, up from the previously forecasted 4%. Nonetheless, the company has adjusted its EPS guidance downwards to a mid-point of $10.00. Despite these changes and a notable 25% rise in share value, Warring believes that Abercrombie & Fitch’s stock remains undervalued. He maintains that the company is in a strong position to outperform its competitors and deliver substantial returns to its shareholders over the coming year.
In other recent news, Abercrombie & Fitch reported strong first-quarter earnings for fiscal year 2025, with earnings per share (EPS) of $1.59, surpassing the consensus estimate of $1.37. The company’s revenue increased by 8% year-over-year, reaching $1.1 billion, although it slightly missed the forecast of $1.08 billion. The Hollister brand contributed significantly with a 22% increase in net sales, outperforming expectations. Despite a decline in Abercrombie & Fitch’s own comparable sales by 10%, the company managed to leverage selling, general, and administrative expenses, achieving a favorable outcome. Analysts from Citi maintained a Buy rating with a $98 target, while Raymond (NSE:RYMD) James reiterated an Outperform rating with a $90 target. Abercrombie & Fitch has been active in stock buybacks, repurchasing $200 million worth of shares in the first quarter. Looking forward, the company has revised its fiscal year 2025 earnings guidance to $10.00 at the midpoint, which is above market projections, and anticipates second-quarter sales growth of 3-5%.
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