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On Wednesday, Wells Fargo (NYSE:WFC) analyst Ike Boruchow adjusted the rating for Canada Goose shares, moving from Underweight to Equal Weight, while maintaining the price target at C$11. In his statement, Boruchow pointed out that despite ongoing fundamental concerns, such as challenges in China, diminishing brand appeal, and direct-to-consumer (DTC) leverage issues, the current valuation of the company has reached historical lows, ranging between 5 and 6 times EBITDA. The company currently trades at an EV/EBITDA multiple of 8.59x with a market capitalization of $791 million. This valuation suggests that the stock’s multiples have bottomed out, and the potential for further downside is now considered limited. According to InvestingPro analysis, Canada Goose appears undervalued at current levels, supported by impressive gross margins of 68.22% and a favorable P/E ratio of 15.13x.
Boruchow noted that Canada Goose has little to no tariff risk, primarily because its products are sourced almost entirely from Canada, making it compliant with the United States-Mexico-Canada Agreement (USMCA). This aspect could provide some stability for the company amidst market uncertainties. InvestingPro data reveals that the company maintains strong financial health with a current ratio of 2.01, indicating solid liquidity to meet short-term obligations.
The maintained price target of C$11 is based on a projection of approximately 10 times earnings per share (EPS) on C$0.80 for the fiscal year 2026, which is lower than Wells Fargo’s current estimate for that year. Conversely, the analyst’s upside scenario for Canada Goose is C$20, based on roughly 12 times EPS on C$1.20 for FY26, which exceeds the firm’s present forecast. For deeper insights into Canada Goose’s valuation and growth prospects, InvestingPro subscribers can access comprehensive financial analysis and additional ProTips in the detailed Pro Research Report.
Boruchow’s evaluation implies a balanced risk/reward setup for investors considering Canada Goose stock. Although the company faces several challenges, the analyst believes that the current stock price reflects these issues and that the risk of further decline is contained.
The company’s stock performance will continue to be monitored as it navigates through the mentioned challenges and strives to maintain its market position in the luxury apparel sector. Investors and market watchers will keep an eye on Canada Goose’s financial results and strategic initiatives to address the concerns outlined by Wells Fargo.
In other recent news, Canada Goose has experienced a series of notable developments. Barclays (LON:BARC) analysts downgraded Canada Goose from Equal Weight to Underweight, lowering the price target from $10 to $8, citing global macroeconomic pressures and increased competition as key challenges. Additionally, Barclays adjusted the price target for the company from $11 to $10, maintaining an Equalweight rating after Canada Goose’s third-quarter fiscal year 2025 results fell short of expectations in sales, margins, and earnings per share. The company reported a 6.2% decline in comparable store sales and an 8.1% drop in wholesale revenue, prompting a revision of its guidance for the fiscal year.
Raymond (NSE:RYMD) James maintained its Market Perform rating on Canada Goose, noting the company’s need for greater consistency and a focus on new product introductions and marketing efforts. Meanwhile, Williams Trading upgraded Canada Goose from Sell to Hold, reflecting a broader reassessment of the footwear and apparel sector amid new tariff impacts. In related news, Perfect Moment Ltd. has expanded its team with former Canada Goose executives, aiming to leverage their expertise for growth in the luxury outerwear market. These developments highlight the challenges and strategic shifts Canada Goose is navigating in the current economic and competitive landscape.
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