TD Cowen analyst Oliver Chen has maintained their neutral stance on CPRI stock, giving a Hold rating yesterday.
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Oliver Chen has given his Hold rating due to a combination of factors related to Capri Holdings’ recent financial performance and future outlook. The company’s third-quarter earnings per share significantly missed analysts’ expectations, primarily due to lower operating income resulting from challenges in their selling, general, and administrative expenses. Despite this setback, management has offered a multi-year guidance that outlines a potential path for improvement, including a notable increase in operating income projected for fiscal year 2026.
However, persistent challenges remain, especially within the Michael Kors brand, which constitutes a substantial portion of the company’s sales. The operating margins across all brands have decreased significantly compared to pre-pandemic levels. While the company is anticipated to generate substantial free cash flow, there are concerns regarding the sustainability of these figures due to one-time benefits. Given the existing uncertainties around the new marketing strategy, leadership, and customer traffic, Oliver Chen maintains a cautious outlook, awaiting more concrete evidence of a successful turnaround strategy, particularly for Michael Kors, slated to manifest by late 2025.
In another report released yesterday, Telsey Advisory also maintained a Hold rating on the stock with a $23.00 price target.