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On Tuesday, UBS analysts adjusted their outlook on G-III Apparel Group (NASDAQ:GIII) by reducing the price target from $37.00 to $32.00 while keeping a Neutral rating on the stock. The revision follows G-III Apparel’s fourth-quarter performance, which, according to UBS, met expectations with a slight earnings per share (EPS) beat due to stronger gross margin (GM) gains. According to InvestingPro data, the company maintains a healthy gross profit margin of 40.2% and trades at an attractive P/E ratio of 6.8x.
Despite the positive Q4 results, UBS expressed concern over the impact of the gradual phaseout of licenses for PVH (NYSE:PVH) brands and persistent challenges in the U.S. wholesale segment. These factors are expected to temper the company’s financial year 2026 (FY26) outlook. UBS anticipates G-III Apparel to forecast low single-digit percentage year-over-year sales growth for FY26, with an EPS ranging between $4.10 and $4.20. This guidance is likely to align sell-side analysts’ estimates, which currently average at $4.11, close to existing projections. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.63, indicating solid liquidity to meet short-term obligations.
The UBS analyst highlighted that the market might have already incorporated this perspective, suggesting that the investor sentiment towards G-III Apparel may remain stable following the Q4 report. Furthermore, the options market is pricing in an approximate 12.8% stock price fluctuation in response to the earnings announcement, compared to a historical average movement of 12.1%. However, UBS anticipates that the actual volatility post-earnings will be less than the +/-12.8% currently expected by the options market.
G-III Apparel Group is known for manufacturing and distributing apparel and accessories under licensed brands, owned brands, and private label brands. The company’s financial health and stock performance are closely watched by investors and analysts, especially in light of the evolving retail landscape and shifting consumer trends. InvestingPro analysis indicates the stock is currently undervalued, with additional insights revealing strong free cash flow yield and management’s aggressive share buyback program. Subscribers can access 8 more exclusive ProTips and a comprehensive Pro Research Report covering G-III’s complete financial picture.
In other recent news, G-III Apparel reported its third-quarter financial results, revealing a 2% year-over-year increase in net sales, reaching $1.09 billion. The company exceeded earnings per share (EPS) expectations, reporting $2.59 against the forecasted $2.26, marking a significant positive surprise. Despite a slight contraction in gross margin due to a higher proportion of sales in licensed brands, the company highlighted growth in its owned brands, which collectively grew over 30%. KeyBanc Capital Markets responded by raising its price target for G-III Apparel to $40, maintaining an Overweight rating, while Guggenheim increased its price target to $38, citing the company’s strong performance and improved profitability estimates for fiscal years 2025 and 2026.
G-III Apparel’s strategic focus on expanding its higher-margin owned brands and exploring additional licensing opportunities is expected to drive earnings outperformance. The company’s inventory levels were reported to be down by 10%, positioning it well for the upcoming holiday season. As part of its strategic initiatives, G-III Apparel is also focusing on international expansion, with significant opportunities anticipated from the recently secured Converse global licensing agreement. Despite the challenging consumer environment and unseasonably warm weather affecting sales, the company remains optimistic about its growth trajectory. The firm’s adjusted financial guidance for fiscal year 2025 reflects an optimistic outlook, with non-GAAP EPS guidance raised to between $4.10 and $4.20.
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