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On Thursday, Jefferies research firm adjusted their financial outlook for Capri Holdings (NYSE:CPRI), increasing the price target on the company’s stock to $17.00, up from the previous $14.00, while maintaining a Hold rating. Currently trading at $18.04, the stock sits near its InvestingPro Fair Value estimate. The update follows Capri Holdings’ recent quarterly financial report, which revealed a mix of results with sales outperforming expectations but earnings per share (EPS) falling short.
The company, known for its ownership of luxury fashion brands, recently updated its fiscal year 2026 guidance to reflect the sale of the Versace brand. The updated forecast now only includes Michael Kors (MK) and Jimmy Choo (JC) in its continuing operations. With impressive gross profit margins of 64% and an EBITDA of $342 million, Capri Holdings has implemented cost-saving measures and is benefiting from net interest income, which are expected to provide a cushion for EPS.
Despite the challenges posed by tariffs, Jefferies anticipates that their impact will be mitigated over time. InvestingPro analysis reveals that while analysts expect a sales decline this year, net income is projected to grow. The firm noted that it is still early days, but Capri Holdings has shown progress with new product introductions and pricing strategies for the Michael Kors brand, leading to a slight increase in brand sales. InvestingPro subscribers have access to 8 additional key insights about CPRI’s financial health and market position.
The anticipated proceeds from the sale of Versace are intended to be used to reduce the company’s debt, which currently stands at $3.1 billion. Jefferies also highlighted that a return to share buybacks in the medium term could act as a catalyst for the company. This strategic move is expected to positively influence Capri Holdings’ financial health and shareholder value.
In other recent news, Capri Holdings has announced a definitive agreement to sell the Versace brand to Prada (OTC:PRDSY) for $1.375 billion, with the transaction expected to close in the second half of 2025. This move is part of a broader strategy to streamline operations and focus on its core brand, Michael Kors, as noted by Bernstein SocGen Group, which maintained a Market Perform rating with a $20.00 price target. Meanwhile, UBS analyst Jay Sole maintained a Neutral rating on Capri Holdings with a $14.00 price target, anticipating that the upcoming earnings report will meet market expectations. Sole highlighted that the company’s decision on whether to provide fiscal year 2026 guidance could significantly impact stock volatility.
Additionally, Capri Holdings announced a leadership change, with Rajal Mehta stepping in as the Interim Chief Financial Officer following the departure of Thomas J. Edwards, Jr. Mehta, who has a long-standing history with the company, will temporarily oversee the finance team while Capri searches for a permanent replacement. The company remains confident in its growth strategies and initiatives, as shared during its recent Investor Day.
The sale of Versace to Prada is seen as a strategic move to reduce debt and simplify Capri’s brand portfolio. Prada’s acquisition, intended to strengthen its position in the luxury market, comes as Versace has been operating at a loss. The market continues to closely watch Capri Holdings’ financial disclosures and strategic plans, particularly in light of these recent developments.
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