Abercrombie & Fitch: Valuation Limits Upside Amid Slowing Core Growth and Rising Revision Risks

William Blair analyst Dylan Carden has maintained their neutral stance on ANF stock, giving a Hold rating on January 6.

Dylan Carden has given his Hold rating due to a combination of factors related to Abercrombie & Fitch’s updated outlook and current valuation. The company’s revised guidance points to solid, but not accelerating, growth: sales and margins are essentially tracking in line with prior expectations and consensus rather than meaningfully outperforming them. While Hollister is expected to post healthy midteens growth in fiscal 2025, the core Abercrombie brand is only projected to grow modestly, implying that underlying comparable sales remain under pressure. Earnings guidance has been tightened but does not materially raise the earnings trajectory relative to what investors had already anticipated.

At the same time, the stock has appreciated notably on optimism around a stronger turnaround in the Abercrombie brand, leaving less room for error. Carden sees meaningful risk that both major brands could post negative comparable sales in early 2026, which would likely drive margin and earnings estimates lower, especially against a backdrop of rising tariff-related costs. With the shares trading around 11 times his forward earnings estimate—an assumption that still counts on relatively resilient margins—he views the risk of downward revisions as outweighing the potential for further multiple expansion. As a result, he expects the stock to trade in a relatively defined range, supported by buybacks but constrained by fundamental uncertainty, leading him to maintain a neutral Hold stance rather than recommend buying or selling aggressively.

In another report released on January 6, Barclays also maintained a Hold rating on the stock with a $115.00 price target.