Morgan Stanley Almost Triples Abercrombie & Fitch Price Target To Imply It's Fairly Valued - Read Why

Morgan Stanley analyst Alex Straton upgraded the shares of Abercrombie & Fitch Co ANF from Underweight to Equal-Weight and raised the price target from $18 to $51.

ANF’s across-the-board 2Q EPS beat outpaced already-elevated expectations into the print, with $1.10 EPS coming in 6x+ the Street’s 16 cents, said the analyst.

A&F topline momentum continued for the 7th consecutive quarter, while Hollister comps turned positive for the first time since 2Q19 ex-COVID.

Management’s indication of Hollister inflection being led by the women’s business stands as a leading indicator for further improvement, the analyst said.

The analyst has become incrementally convinced that A&F may rightfully become one of the few successful Retail turnarounds in history.

The outstanding men’s opportunity across both brands, further raw material easing, improved ability to chase, & the fact that fashion runs in cycles, presumably leaving runway for both banners’ topline & profitability from here, leaves the analyst thinking aggregate ANF momentum could continue in the near-term.

The updated price target, the analyst said, represents the midpoint of the revised $34 base case & $68 bull case, as the analyst views bull as more readily achievable given conservative base case assumptions.

The analyst, however, maintains healthy skepticism on performance sustainability & consistency in the long-term.

Looking to ‘24E & beyond, the analyst sees increasing risk with each passing year that the growth will be difficult to sustain & that both or either banner could succumb to fashion cyclicality.

Price Action: ANF shares are trading higher by 0.32% at $50.62 on the last check Friday.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorEquitiesNewsUpgradesPrice TargetMarketsAnalyst RatingsTrading IdeasGeneralBriefsExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!