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On Monday, UBS analyst Mauricio Serna revised the price target for Abercrombie & Fitch (NYSE:ANF) stock, decreasing it to $210 from the previous $220, while continuing to endorse the stock with a Buy rating. The adjustment in the price target reflects a modest reduction in the anticipated earnings per share (EPS) for the fiscal year 2026, as well as additional marketing investments projected to support growth in subsequent years.
Serna explained that the new price target is based on approximately 16 times the revised $13.05 earnings per share estimate for fiscal year 2026. The company currently trades at a P/E ratio of 9.75, with impressive gross profit margins of 64.66%. The decrease in the price target is attributed to a lower revenue base forecast for fiscal year 2025 and the aforementioned increase in marketing expenditures. Additionally, slight alterations in the price-to-earnings (P/E) ratio used in the valuation model contributed to the change in the target price.
The analyst emphasized that, despite some inconsistent data in the near term, the fundamentals of Abercrombie & Fitch are strong, and the expectation is that the stock will perform better than the market over the next twelve months (NTM). According to UBS, the new price target of $210 aligns Abercrombie & Fitch’s valuation with that of its industry peers when considering metrics such as P/E, price-to-sales (P/Sales), and enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).
Serna’s commentary reinforces UBS’s confidence in Abercrombie & Fitch’s core business strengths and its potential for stock performance in the near term. Despite the reduction in the price target, the firm’s outlook on the stock remains positive, as indicated by the maintained Buy rating.
In other recent news, Abercrombie & Fitch Co. announced an upward revision of its net sales forecast for both the fourth quarter and the entire fiscal year of 2024. The company now anticipates fourth-quarter sales growth between 7% and 8%, and full-year growth around 15%. CEO Fran Horowitz attributed this positive adjustment to strong comparable sales across regions and brands during the holiday season. Despite this optimistic sales outlook, the company maintained its operating margin expectations for both periods.
Separately, UBS reaffirmed its Buy rating on Abercrombie & Fitch, maintaining a price target of $220. The firm highlighted the company’s appealing valuation and strong brand fundamentals within the Specialty Retail sector. UBS anticipates that earnings per share growth will be a key driver for the stock’s future performance. Additionally, JPMorgan increased its price target for Abercrombie & Fitch to $204, citing strong momentum and successful operating strategies.
William Blair, however, maintained a Market Perform rating, expressing caution about the company’s ability to sustain its operating margin amid expansion efforts. The firm noted potential challenges if the Abercrombie brand underperforms, especially at the retail level. These recent developments indicate varied analyst perspectives, reflecting both optimism and caution about Abercrombie & Fitch’s future performance.
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