UPDATE: Credit Suisse Downgrades Abercrombie & Fitch As Transformation Initiatives Are Not Enough To Offset Sector Pressures

In a report published Friday, Credit Suisse analyst Christian Buss downgraded the rating on Abercrombie & Fitch Co. ANF from Outperform to Neutral, and lowered the price target from $53.00 to $28.00. In the report, Credit Suisse noted, “We downgrade shares to Neutral given our view that competitive pressures look to be intensifying in the teen apparel sector, delaying earnings power even with a significant cost restructuring and a shift in pricing strategy for core brands. We increasingly believe the threat of structural declines in mall traffic and the rise of deep value retailers like H&M, Zara, UNIQLO, Forever 21, and Primark will make it challenging for specialty retailers like Abercrombie who do not have the scale, speed of operations, or value perception with consumers to deliver sustained earnings momentum. We lower our estimates and target price from $53 to $28.” Abercrombie & Fitch closed on Thursday at $28.90.