Raymond James maintains Market Perform on Canada Goose stock

On Friday, Raymond (NSE:RYMD) James reiterated its Market Perform rating on Canada Goose (GOOS:CN) (NYSE: GOOS), maintaining the previously set price target. The company, currently valued at $945 million, has seen its stock decline over 10% in the past week, according to InvestingPro data. Analyst Rick Patel provided an assessment of the company’s recent performance, noting a need for greater consistency and confidence in its potential to exceed expectations. Canada Goose’s third-quarter earnings per share (EPS) of C$1.51 fell short of the projected figures, with Raymond James estimating C$1.47 and the consensus at C$1.54. Despite flat revenue, which did not meet the expected 2% increase, the company saw an improvement in gross margin percentage, up by 85 basis points, surpassing both Raymond James’ and the Street’s forecasts. The company maintains impressive gross profit margins of 68.2%.

The analyst pointed out that the revenue shortfall was due to year-over-year declines in North America and the Asia-Pacific region, including China, which contrasted with the anticipated growth in both markets. However, Patel acknowledged positive developments, such as the favorable reception of the Snow Goose capsule collection by new Creative Director Haider Ackermann, which spurred higher demand in December and January. According to InvestingPro analysis, the company maintains strong financial fundamentals with a current ratio of 2.01, indicating healthy liquidity. InvestingPro subscribers have access to 6 additional key insights about Canada Goose’s financial position.

Patel also addressed the company’s strategies to improve performance. He highlighted the need for new product introductions, marketing efforts, and store initiatives to drive a more sustained positive change in comparable sales. The guidance for fiscal year 2025 comparable sales was adjusted downwards. The report further noted that selling, general, and administrative expenses (SG&A) grew unexpectedly, despite previous cost-cutting measures, such as reducing headcount, leading to a deleveraging effect and pressuring the EBIT margin.

In conclusion, the analyst expressed a neutral stance, emphasizing the importance of better expense control for Canada Goose. Enhanced management of expenses is seen as a key factor that would bolster Raymond James’ confidence in the company’s long-term margin expansion potential. InvestingPro’s comprehensive analysis indicates the stock is currently trading below its Fair Value, with an overall Financial Health Score of "GOOD." For detailed insights into Canada Goose’s valuation and financial metrics, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Canada Goose has been under the spotlight following the release of its financial results. The company reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of C$1.51, surpassing the analyst consensus of C$1.10. However, revenue for the quarter was C$607.9 million, falling short of the projected C$615.24 million.

CFRA analyst Zachary Warring has adjusted the price target for Canada Goose shares to $11.00, maintaining a Hold rating. This adjustment is based on a multiple of 15.1 times the forecasted earnings per share for the fiscal year ending in March 2026. Despite the revenue miss, Canada Goose reaffirmed its revenue outlook but revised its EBIT margin guidance downward by 50 basis points.

The company’s sales channels reveal a 1% year-over-year increase in Direct-to-Consumer revenues, while Wholesale revenues saw an 8% decline. The third quarter also saw an improvement in gross margin, rising to 74.4%, attributed to effective pricing strategies and reduced inventory provisioning. These are some of the recent developments from the company.

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