Capri Holdings Sentiment 'Too Negative': Analyst Sees '3 Ways To Win'

Zinger Key Points

Capri Holdings Ltd CPRI received an upgrade from BMO Capital Markets, with analyst Simeon Siegel raising the stock to Outperform and increasing the price target from $25 to $31, citing opportunities to improve sentiment, margins, and debt management.

While sentiment for the stock has turned "too negative," the pressure on the company's sales, margins, and debt may turn “less bad,” according to Siegel.

The Capri Holdings Thesis: There are no signs of strength or inflection, but negative sentiment offers "downside protection," Siegel said in the upgrade note.

Check out other analyst stock ratings.

With “forgotten” stocks, a change in sentiment takes place before a change in fundamentals, the analyst stated. He added that there are "three ways to win" with Capri Holdings:

  • Sales are low: The recent decline in the company's revenues "appears more a function of distraction/lack of effort post-transaction announcement than of an overstretched logo," the analyst wrote. It needs to address its inventory gluts, which could "prove a powerful opportunity," he added.
  • Margins are low: The company has the potential to improve margins, Siegel said.
  • Debt Is High: The analyst suggested this could be one of the earliest and most underappreciated upside opportunities, as reducing the Market Cap-to-Enterprise Value gap through asset sales or improved cash flow could significantly benefit shares.

CPRI Price Action: Shares of Capri Holdings were up 7.29% to $21.78 at the time of publication Monday.

Read More:

Photo: Suteren Studio via Shutterstock

CPRI Logo
CPRICapri Holdings Ltd
$14.403.75%

Stock Score Locked: Want to See it?

Benzinga Rankings give you vital metrics on any stock – anytime.

Reveal Full Score
Edge Rankings
Momentum
5.28
Growth
7.19
Quality
57.20
Value
27.22
Price Trend
Short
Medium
Long
Got Questions? Ask
How will Capri Holdings improve sales?
Which companies could benefit from improved margins?
Are there investment opportunities in debt management?
What strategies can help Capri Holdings reduce debt?
Which retail stocks are undervalued like Capri Holdings?
How might inventory issues create opportunities for investors?
Could Capri Holdings be a turnaround story?
Which asset sales could lead to higher valuations?
How does analyst sentiment affect stock performance?
What trends are emerging in the luxury retail sector?
Market News and Data brought to you by Benzinga APIs
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm

Posted In:
Comments
Loading...