Telsey raises G-III Apparel stock target to $30; keeps rating

On Monday, Telsey Advisory Group adjusted its outlook on G-III Apparel Group, Ltd. (NASDAQ:GIII), increasing the price target to $30 from the previous $27, while keeping a Market Perform rating on the company’s shares. According to InvestingPro data, the stock currently trades at attractive valuation multiples, with metrics suggesting potential upside from current levels. The company maintains a "GREAT" overall financial health score, supported by strong cash flows and moderate debt levels. The firm recognized G-III Apparel’s solid beginning to the year, highlighting sales that surpassed expectations, spurred by strong performances from the company’s owned brands such as DKNY, Karl Lagerfeld, and Donna Karan. These brands have successfully compensated for lower revenues from Calvin Klein and Tommy Hilfiger licenses.

The first quarter results for G-III Apparel showed favorable expense management and other income that contributed to an earnings per share (EPS) figure exceeding projections. With trailing twelve-month revenue of $3.15 billion and a healthy gross profit margin of 40.8%, the company demonstrates solid operational efficiency. However, the outlook for the second quarter did not meet initial expectations for both revenue and earnings, largely due to supply chain issues and the timing of shipments. Consequently, G-III has withdrawn its full-year earnings forecast, though it has maintained its revenue projections.

Telsey’s commentary noted that while G-III management anticipates continued momentum in its owned brands, as evidenced by the sustained revenue outlook, the current economic climate presents uncertainties, particularly regarding consumer demand for discretionary items in the latter half of the year. Tariffs and macroeconomic conditions remain unpredictable, adding to the challenges facing the company in the near term.

Despite these headwinds, Telsey sees positive aspects in G-III’s strategy, such as the focus on increasing the exposure of higher-margin owned brands, expanding direct-to-consumer (DTC) sales, and strengthening the owned brand portfolio. InvestingPro analysis reveals the company’s strong financial position, with a current ratio of 2.89 and an impressive Altman Z-Score of 4.55, indicating robust financial health. Discover 12 additional exclusive ProTips and comprehensive financial metrics with an InvestingPro subscription. The expansion efforts for the DKNY brand, growth of Karl Lagerfeld, and licensing agreements with Nautica, Halston, Champion, and Converse are expected to mitigate losses and improve market visibility. Moreover, G-III’s partnership with AWWG is anticipated to drive growth in the European market.

The revised price target of $30 is based on a 7.7 times multiple applied to Telsey’s two-year forward EPS estimate of $3.50 for G-III Apparel, which aligns with the two-year average next twelve months (NTM) multiple of 7.5 times. The stock currently trades at an EV/EBITDA ratio of 2.78x, with a market capitalization of approximately $975 million. For detailed valuation analysis and comprehensive research reports covering G-III Apparel and 1,400+ other stocks, visit InvestingPro. Despite the positive aspects of G-III’s strategy and the potential for owned-brand growth, the firm’s Market Perform rating reflects the ongoing pressures from a challenging macroeconomic environment and the unpredictable nature of the wholesale channel.

In other recent news, G-III Apparel Group Ltd reported a notable earnings beat for the first quarter of fiscal year 2026. The company achieved earnings per share of $0.19, significantly exceeding the forecast of $0.1079. Despite this positive earnings result, G-III’s net sales declined to $584 million from $610 million the previous year, slightly above expectations but still raising concerns about demand. The company’s key brands, including DKNY and Karl Lagerfeld, demonstrated strong growth, but the overall revenue drop and uncertainty regarding future guidance have led to investor apprehension. G-III has withdrawn its net income and adjusted EBITDA guidance due to uncertainties related to tariffs. Analysts from firms like KeyBanc Capital Markets have noted the company’s pricing power and strategic efforts to mitigate tariff impacts through sourcing diversification and vendor negotiations. G-III has reaffirmed its full fiscal year 2026 net sales guidance of $3.14 billion, while anticipating second-quarter net sales of approximately $570 million. The company remains cautiously optimistic about consumer demand and is actively working to capture market share amid ongoing macroeconomic challenges.

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