William Blair analyst Dylan Carden has maintained their neutral stance on ANF stock, giving a Hold rating on August 20.
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Dylan Carden has given his Hold rating due to a combination of factors influencing Abercrombie & Fitch’s current financial outlook. The company reported strong revenue growth in the recent quarter, with improved earnings and gross margins, despite challenges such as increased promotions and tariffs. However, the guidance provided does not clarify the comparable sales outlook, and the near-term earnings have been adjusted downward to account for the tariff impacts.
Dylan Carden also considers the structural operating margin, which is estimated to be around 10% to 11%, but this is complicated by potential negative comparable sales and increased store openings that could pressure margins. The stock is expected to remain in a range between $80 and $100 until there is more clarity on the sales deceleration at both A&F and Hollister, and its impact on margins. The current valuation reflects a cautious stance, with shares trading at 10.3 times the out-year EPS estimate, amidst risks of declining comparable sales and the challenges of sustaining growth through store expansion.
In another report released on August 20, Citi also downgraded the stock to a Hold with a $105.00 price target.