UBS cuts Guess stock price target to $12 from $15, keeps neutral

On Tuesday, UBS analysts led by Mauricio Serna adjusted their outlook on Guess (NYSE:GES) shares, reducing the price target to $12 from the previous $15 while maintaining a Neutral rating on the stock. This revision comes in light of the anticipated challenges the company faced in the fourth quarter, particularly in the Americas retail and Asia markets. According to InvestingPro data, the stock appears undervalued despite trading at an attractive P/E ratio of 6.28x and offering a substantial 10.65% dividend yield.

Serna noted that these persistent challenges, compounded by foreign exchange pressures, are expected to contribute to a fourth-quarter earnings per share (EPS) shortfall of 6 cents compared to previous estimates. Consequently, the analysts predict that Guess will likely issue earnings guidance for the fiscal year 2026 (calendar year 2025) that falls short of the current consensus forecast of $2.15 EPS. InvestingPro analysis reveals the company maintains a GOOD financial health score, with liquid assets exceeding short-term obligations, suggesting resilience despite current headwinds.

Despite the lowered expectations, UBS suggests that the market may have already accounted for the soft guidance, as evidenced by the stock’s year-to-date decline of 20%, which contrasts with the S&P 500’s 5% drop over the same period. The analysts pointed out that the prevailing sentiment around Guess shares is quite bearish, which they believe leads to a balanced risk/reward scenario heading into the earnings announcement.

The options market is currently pricing in a potential post-earnings stock price movement of approximately +/-10.5%, which is slightly below the historical average move of +/-12.6%. UBS anticipates that the actual volatility around the earnings release will be less extreme than the options market suggests.

Guess’s financial performance and guidance are being closely watched by investors, as the company navigates through the retail challenges and currency headwinds that have impacted its recent results. The UBS team’s analysis underscores the cautious approach taken by the market towards Guess’s near-term prospects.

In other recent news, Guess Inc. announced the appointment of Christopher N. Lewis (JO:LEWJ) as a new independent director, following the resignation of board member Thomas J. Barrack Jr. Lewis, who has a background as Chief Legal Officer at Edward Jones, will serve on the Board until the 2025 annual shareholders meeting. This appointment is part of a settlement agreement with the Employees Retirement System of Rhode Island, requiring the selection of a new independent director. Meanwhile, Jefferies analyst Corey Tarlowe adjusted the price target for Guess shares from $16 to $14, maintaining a Hold rating. This revision follows discussions with Guess management and reflects ongoing challenges in the North American retail sector. Despite difficulties, the company has seen some positive trends in its wholesale operations and off-price segment. Jefferies’ cautious outlook underscores the need for improved earnings revisions to strengthen Guess’s financial position. These developments highlight Guess Inc.’s current strategic and financial landscape.

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