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On Friday, Williams Trading revised its stance on Canada Goose shares, downgrading the luxury apparel company from Hold to Sell, while setting a new price target of Cdn$10.00. The downgrade followed the company’s fourth-quarter results for fiscal year 2025, which surpassed expectations on multiple fronts. According to InvestingPro data, the stock has surged nearly 30% in the past week, with technical indicators suggesting overbought conditions. Despite the strong performance, Williams Trading analyst Sam Poser attributed the day’s spike in stock price primarily to short covering, noting that over 20% of Canada Goose’s float was held in short positions.
Poser elaborated that the unexpectedly positive results may have prompted a rush among short sellers to close their positions, thus driving up the share price. He cautioned investors, suggesting that the fourth quarter’s success owed more to favorable weather conditions than to any fundamental improvements within the company or its brand. However, InvestingPro analysis shows the company maintains impressive gross margins of nearly 70% and operates with strong financial health metrics. According to Poser, luxury brands typically do not see their sales significantly influenced by weather patterns, as their performance is more closely tied to product appeal, brand strategy, and market positioning.
The analyst pointed out that Canada Goose’s management had previously cited warmer weather as a detriment to sales during the third and fourth quarters of 2024, while colder conditions in the first quarter of 2024 had boosted sales in China. However, he noted that in the earnings calls for the third and fourth quarters of 2025, the company did not emphasize the impact of the colder weather on its improved performance.
Poser’s remarks suggest skepticism about the sustainability of Canada Goose’s recent success. He indicated that while the company is starting to diversify its product offerings, it does not fit the traditional mold of a luxury brand, which could limit its growth potential in that sector. The analyst’s new price target reflects a conservative outlook on the company’s valuation in light of these factors. For a deeper understanding of Canada Goose’s valuation and growth prospects, investors can access comprehensive analysis and 10+ additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Canada Goose reported a strong finish to its fourth quarter, with earnings per share of $0.33, surpassing Wall Street’s expectations of $0.23. The company’s total revenue for the quarter grew by 4% year-over-year, excluding foreign exchange impacts, with a notable 6.8% increase in global same-store sales. Gross margins also improved significantly, rising by 560 basis points to 71.3%. Despite these positive results, Williams Trading downgraded Canada Goose from Hold to Sell, setting a price target of Cdn$10.00. The analyst at Williams Trading attributed the strong quarterly results more to favorable weather conditions than to fundamental improvements within the company. Meanwhile, Evercore ISI raised its price target for Canada Goose to $11 from $10, maintaining an In Line rating. The firm noted the company’s strong product enhancements and store execution improvements as contributing factors to the sales acceleration. However, Evercore ISI also highlighted potential higher selling, general, and administrative expenses in fiscal year 2026, which may limit upward revisions to consensus EPS forecasts.
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