Raymond James cuts ANF price target to $124 from $165

On Monday, Raymond (NSE:RYMD) James made a significant adjustment to Abercrombie & Fitch’s (NYSE:ANF) price target, bringing it down from $165.00 to $124.00, yet reaffirmed an Outperform rating on the stock. The revision comes ahead of the company’s fourth-quarter earnings report scheduled for March 5.

Analysts at Raymond James cited a variety of data sources for the revision, including Google (NASDAQ:GOOGL) Trends, mobile app insights from Sensor Tower, store traffic information from Placer Ai, and monitoring of online promotions. Their findings suggest a decrease in demand for the Abercrombie brand, evidenced by reduced searches and mobile app usage, as well as increased year-over-year promotions. In contrast, the Hollister brand, which accounts for approximately half of the company’s revenue, is experiencing an upswing in demand towards the end of the fourth quarter and the beginning of the first quarter, with fewer promotions noted. InvestingPro data reveals impressive gross profit margins of 64.66% and strong return on equity of 51%, indicating efficient operations despite market challenges.

The firm’s adjusted estimates for Abercrombie & Fitch’s fiscal year 2025 now align with the consensus on revenue and are slightly higher for EBIT% margin, where they see potential for upside due to SG&A leverage. Their earnings per share (EPS) projection of $11.49 surpasses the Street’s expectation of $11.35. Raymond James also emphasized the strong net cash position and robust free cash flow of Abercrombie & Fitch, which they believe could further enhance shareholder value through stock buybacks.

Despite a 33% decline in ANF stock year-to-date, Raymond James considers the current market expectations to already reflect slower growth forecasts. The analysts find the risk/reward balance attractive, especially given the stock’s price-to-earnings ratio of 8x based on fiscal year 2026 EPS estimates, for a business that is anticipated to achieve mid-single-digit revenue growth and high-single-digit EPS growth. InvestingPro analysis shows the stock currently trades at a P/E of 9.64x with strong cash flows that adequately cover interest payments. Discover more insights and 12 additional ProTips for ANF in the comprehensive Pro Research Report, available exclusively to subscribers.

In other recent news, Abercrombie & Fitch Co. announced an increase in its net sales forecast for the fourth quarter and the entire fiscal year of 2024. CEO Fran Horowitz highlighted record net sales quarter-to-date through December, driven by strong comparable sales across all regions and brands during the holiday season. This growth is attributed to strategic product assortments and marketing initiatives. Meanwhile, analysts have adjusted their views on the company, with Citi reducing its price target to $160 while maintaining a Buy rating, expecting Abercrombie & Fitch to surpass the consensus earnings per share estimate of $3.53 with a forecast of $3.61. UBS also revised its price target to $210 from $220, citing a modest reduction in anticipated earnings per share for fiscal year 2026 and increased marketing investments. William Blair maintained a Market Perform rating, expressing caution about the company’s margin goals amid its expansion strategy. Despite mixed investor sentiment, UBS reiterated a Buy rating with a $220 target, forecasting a 20% compound annual growth rate in earnings per share over the next five years. These recent developments reflect a complex but optimistic outlook for Abercrombie & Fitch as it navigates market conditions and strategic initiatives.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.