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Investing.com - UBS raised its price target on Designer Brands (NYSE:DBI) to $4.00 from $3.00 while maintaining a Neutral rating ahead of the company’s upcoming earnings report on September 9. The stock, currently trading at $3.97, has shown strong momentum with a 5.6% gain over the past week, though it remains down 23.7% year-to-date. According to InvestingPro analysis, Designer Brands is currently fairly valued.
The investment firm cited modestly improved fundamentals for the footwear retailer during the second quarter, which it believes are already reflected in consensus earnings estimates. UBS expects Designer Brands to report second-quarter earnings per share in line with market expectations. InvestingPro data reveals that three analysts have recently revised their earnings estimates downward, with the company expected to remain unprofitable this year.
Despite the improved outlook, UBS anticipates Designer Brands will refrain from reinstating its fiscal year 2025 guidance due to ongoing uncertainty regarding tariffs. This uncertainty will likely shift market focus to the company’s third-quarter-to-date performance trends.
UBS expects Designer Brands to report solid early third-quarter performance, supported by robust demand during the Back-to-School shopping season. This aligns with positive updates from other softlines retailers, suggesting the market already anticipates favorable commentary.
The options market is pricing in a 12.7% share price movement following the earnings report, exceeding the historical average move of 10.9%, though UBS expects less volatility than what options pricing suggests.
In other recent news, Designer Brands Inc. reported disappointing financial results for the first quarter of fiscal year 2025. The company’s earnings per share (EPS) were -$0.26, which was significantly below the forecasted -$0.08. Additionally, revenue for the quarter was $686.9 million, falling short of the expected $736.02 million. These results have raised concerns among investors about the company’s performance and market conditions. In a related development, UBS has lowered its price target for Designer Brands stock to $3.00 from $3.50, while maintaining a Neutral rating. The reduction in the price target is attributed to the company’s suspension of its fiscal year 2025 guidance, which UBS links to tariffs having a larger impact than previously anticipated. These recent developments highlight the challenges facing Designer Brands in the current economic climate.
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