KeyBanc cuts G-III Apparel price target to $30, keeps rating

On Monday, KeyBanc Capital Markets adjusted its outlook on G-III Apparel Group, Ltd. (NASDAQ:GIII) by reducing the price target from $40.00 to $30.00 while maintaining an Overweight rating on the company’s stock. The adjustment follows G-III Apparel’s recent announcement of financial results that met the higher end of their guidance. The stock has experienced significant pressure, declining over 21% in the past week, though InvestingPro analysis suggests it’s currently undervalued. However, the company also retracted its profitability forecast for fiscal year 2025.

Ashley Owens, a KeyBanc analyst, noted the company’s solid performance, stating that G-III’s core owned brands, including Karl Lagerfeld (KL), Donna Karan (DK), and DKNY, are experiencing double-digit growth. With annual revenue of $3.15 billion and a healthy gross profit margin of 40.8%, the company demonstrates strong operational efficiency. Owens highlighted that the upcoming licensing launches scheduled for the second half of the year reinforce the belief that G-III Apparel remains on track to meet its revenue guidance for the fiscal year.

Despite the positive outlook, there are challenges ahead. The company anticipates that the impact of license roll-offs will become more significant next year, potentially affecting top-line growth. However, Owens expects that the negative effects of tariffs will decrease, leading to opportunities for earnings expansion. The company maintains a strong financial position with a current ratio of 2.89 and moderate debt levels, supporting this optimism for a stronger, higher-margin business moving forward. InvestingPro subscribers can access 14 additional key insights about G-III’s financial health and growth potential through detailed Pro Research Reports.

KeyBanc’s analysis suggests that while the withdrawal of the FY25 profitability guidance has influenced the decrease in the price target, the firm believes that the market’s reaction may be overstated. The sentiment remains positive due to the robust fundamentals of G-III Apparel, which are deemed to be intact. With a trailing twelve-month EPS of $4.28 and strong cash flows, the company’s positioning and strategy are expected to enable it to navigate through the upcoming challenges and capitalize on growth opportunities.

In other recent news, G-III Apparel Group reported a strong earnings beat for the first quarter of fiscal year 2026, with earnings per share (EPS) of $0.19, surpassing the forecast of $0.1079. The company achieved net sales of $584 million, which were slightly above expectations but represented a decline from $610 million the previous year. Despite the earnings beat, G-III Apparel withdrew its full-year earnings forecast due to supply chain issues and the timing of shipments, although it maintained its revenue projections. Telsey Advisory Group adjusted its outlook on G-III Apparel, raising the price target to $30 from $27 while keeping a Market Perform rating, citing strong performances from owned brands like DKNY and Karl Lagerfeld. However, the outlook for the second quarter did not meet initial expectations, largely due to ongoing supply chain challenges and economic uncertainties impacting consumer demand for discretionary items. G-III Apparel anticipates Q2 net sales of approximately $570 million and projects low to mid-single-digit growth in the latter half of the fiscal year. The company also reaffirmed its FY2026 net sales guidance of $3.14 billion but withdrew net income and adjusted EBITDA guidance due to tariff uncertainties. G-III Apparel’s strategic focus on expanding its higher-margin owned brands and direct-to-consumer sales is expected to drive growth, with particular emphasis on the DKNY and Karl Lagerfeld brands.

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