Capri Holdings: Early-Stage Turnaround Progress Offset by Rich Valuation and Execution Risks, Warranting a Hold Rating

Brooke Roach, an analyst from Goldman Sachs, has initiated a new Hold rating on Capri Holdings (CPRI).

Brooke Roach has given his Hold rating due to a combination of factors that balance improving fundamentals with notable risks. Capri’s financial position has strengthened after the Versace divestiture, and early signs of a successful turnaround at Michael Kors are visible through better full‑price sales and improving revenue and profit trends. Management has made substantial changes to pricing, marketing, and channel management, which are beginning to bear fruit, supporting the view that earnings could recover further if execution remains solid.

At the same time, Roach views the turnaround as still being in its early stages, with sales and margins meaningfully below past peaks and brand momentum indicators offering a mixed picture. Capri’s valuation is seen as rich relative to both its own history and comparable companies, limiting upside at current levels. In addition, there is considerable execution risk as the company attempts to extend recent progress in the full‑price channel to its much larger and more profitable outlet business. Given that market expectations already assume a substantial improvement in performance, Roach judges that the risk‑reward profile is balanced, supporting a Hold rather than a more aggressive rating.

According to TipRanks, Roach is a 3-star analyst with an average return of 3.0% and a 55.41% success rate. Roach covers the Consumer Cyclical sector, focusing on stocks such as Macy’s, Lululemon Athletica, and VF.

In another report released yesterday, UBS also maintained a Hold rating on the stock with a $25.00 price target.