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On Thursday, CFRA analyst Zachary Warring adjusted the price target for Canada Goose shares, listed on the New York Stock Exchange (NYSE: GOOS), increasing it to $11.00 from the previous $10.00. Despite this change, the firm maintained its Hold rating on the stock. Currently trading at $10.03, with a market capitalization of approximately $970 million, InvestingPro analysis suggests the stock is slightly undervalued based on their proprietary Fair Value model.
In his analysis, Warring justified the revised price target by referencing a multiple of 15.1 times the forecasted earnings per share (EPS) for the fiscal year ending in March 2026 (FY26). This valuation is below the three-year average forward price-to-earnings (P/E) multiple of 18.3x for Canada Goose. The adjustment reflects CFRA’s perspective that the company’s average forward P/E multiple is likely to continue its downward trend, influenced by expectations of minimal growth and a long-term operating margin between 12% and 13%. According to InvestingPro data, the company maintains impressive gross profit margins of 67.94% and shows strong financial health with a comfortable current ratio of 1.85, indicating solid liquidity management.
The EPS estimate for FY25 remains unchanged at CAD1.00, while the projection for FY26 has been slightly increased by CAD0.05 to CAD1.05. Canada Goose reported normalized earnings for the third quarter (Q3) at CAD1.51 per share, which matched consensus estimates and compared to CAD1.35 in the same period a year prior. Revenue for the quarter was CAD608 million, narrowly missing the expected CAD610 million by CAD5 million.
A closer look at the company’s sales channels reveals a 1% year-over-year increase in Direct-to-Consumer revenues, totaling CAD518 million, while Wholesale revenues experienced an 8% decline, falling to CAD76 million. Additionally, the third quarter saw an improvement in gross margin, which rose by 70 basis points year-over-year to 74.4%, attributed to effective pricing strategies and reduced inventory provisioning.
In light of these financial results, Canada Goose has reaffirmed its revenue outlook but has revised its EBIT margin guidance downward by 50 basis points. CFRA’s decision to maintain the Hold rating on Canada Goose stock is influenced by its trading position, which is significantly below its average forward P/E multiple, coupled with a lack of strong catalysts to stimulate investor interest. InvestingPro subscribers have access to additional insights, including 10 proprietary ProTips and a comprehensive Pro Research Report that provides deep-dive analysis of Canada Goose’s valuation metrics, financial health, and growth prospects.
In other recent news, Canada Goose Holdings Inc (NYSE:GOOS). reported fourth-quarter earnings that exceeded analyst expectations, despite revenue falling short of projections. The luxury outerwear maker posted adjusted earnings per share of C$1.51, surpassing the analyst consensus of C$1.10. However, revenue was reported at C$607.9 million, missing the C$615.24 million analysts had projected. Total (EPA:TTEF) revenue saw a decrease of 2.2% year-on-year, while direct-to-consumer revenue inched up 0.7% to C$517.8 million.
Wholesale revenue dropped 7.5% to C$75.7 million as the company continued to streamline its inventory and focus on brand-aligned partnerships. Gross profit for the quarter rose slightly to C$452.0 million, with gross margin expanding to 74.4% from 73.7% in the prior-year period. These recent developments reflect the company’s focus on balancing operational efficiency with strategic investments to drive brand momentum across all channels.
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