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Investing.com - Raymond James raised its price target on Abercrombie & Fitch (NYSE:ANF) to $105.00 from $99.00 on Thursday, while maintaining an Outperform rating on the stock.
The firm’s decision follows Abercrombie’s second-quarter fiscal 2025 results, which exceeded expectations for earnings per share, revenue, gross margin, and EBIT margins. The retailer’s Hollister brand showed particular strength, posting 19% growth compared to analyst expectations of 12%. The company’s impressive gross profit margin of 62.7% underscores its operational efficiency.
The A&F brand itself faced challenges, with revenue declining 5% versus expectations of flat performance, due to elevated promotions needed to clear excess inventory. Raymond James expressed cautious optimism for the second half of fiscal 2025, citing leaner inventory, strength in denim, Boho and Western categories, increased traffic, and easier upcoming comparisons.
Abercrombie adjusted its earnings guidance downward due to higher tariff assumptions, with net tariff costs now estimated at $90 million, up from $50 million previously. This represents 290 basis points of margin pressure in the second half of the fiscal year.
The company raised its full-year fiscal 2025 revenue growth guidance to 5-7%, up from the previous 3-6% forecast, with Raymond James noting potential conservatism in tariff mitigation strategies and operating expense management. InvestingPro analysis suggests the stock is currently undervalued, with additional insights and detailed valuation metrics available in the comprehensive Pro Research Report.
In other recent news, Abercrombie & Fitch reported its earnings for the second quarter of 2025, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $2.32, exceeding the forecasted $2.27. Revenue also outperformed projections, reaching $1.2 billion compared to the anticipated $1.19 billion. Despite these positive financial results, UBS reiterated its Buy rating on Abercrombie & Fitch, maintaining a price target of $130. UBS highlighted the company’s strengthened position in the US Specialty Retail sector over the past five years as a reason for its optimistic outlook. These developments reflect Abercrombie & Fitch’s recent performance and market evaluations.
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