On Wednesday, Caleres (NYSE:CAL) saw its price target increased by Piper Sandler from $30.00 to $35.00, while the firm kept a Neutral rating on the stock. This adjustment came after the company reported its fourth-quarter earnings, which included an operating margin miss but also provided strong guidance for the fiscal year 2024. The management team at Caleres has been recognized for their ability to sustain earnings per share (EPS) above $4.00, with notable profitability enhancements within their Brand Portfolio possibly driving some reevaluation of the stock's multiple.
Caleres' stock remained resilient on Wednesday despite the operating margin shortfall, buoyed by the EPS outperformance for the fourth quarter. Piper Sandler noted that while the earnings beat was a positive highlight, the operating margin miss might have been overshadowed. The firm expressed concerns regarding the level of investment that may be necessary to fuel future growth, particularly within the Brand Portfolio segment.
The analyst from Piper Sandler pointed out that the increase in the price target to $35 reflects a forward-looking price-to-earnings (P/E) multiple for the year 2025. Despite the positive aspects of Caleres' recent performance and future prospects, the decision to maintain a Neutral rating indicates a cautious stance on the stock's current valuation and potential investment requirements.
Caleres' ability to maintain a strong EPS has been a point of validation against skeptics, and the company's focus on profitability within its Brand Portfolio has been a key factor in this achievement. However, the analyst highlighted the need for clarity on the investments needed for growth, signaling that while the outlook is positive, there are still aspects that require careful consideration.
The updated price target of $35 by Piper Sandler suggests a modest optimism about Caleres' future performance, taking into account both the achievements and the challenges that lie ahead.
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