D.A. Davidson Analyst: Apparel Makers To Post Strong Q4, Face Currency Headwinds

Apparel makers are getting hurt by currency headwinds, but relatively benign winter weather at home and higher consumer spending should help upcoming quarterly results, an analyst said Thursday.

D.A. Davidson's Andrew Burns expects solid fourth-quarter performance in the sector, although he figures companies will trim their outlooks.

Since November 1 the U.S. dollar is up 56 percent against the Russian ruble and by 11 percent versus the euro and Canadian dollar.

Both Wolverine World Wide, Inc. WWW and Callaway Golf Co ELY recently cited the currency impact in lowering guidance for 2015.

Columbia Sportswear Company COLM and VF Corp VFC might make similar moves when they report fourth-quarter results next month.

Burns rates both companies at Buy and suggested using "any currency related weakness as an opportunity" to acquire the shares.

Columbia is set to post results February 12 and Burns, on Wednesday, cut his 2015 earnings estimate by 3 percent citing currency headwinds. The analyst maintained a $53 target.

Burns trimmed 4 percent from his full-year earnings outlook for VF Corp, which owns the North Face and Timberland brands.

VF hasn't slated a date for earnings, but Burns, who cut his target on the company more than 2 percent to $84, said VF will fail to meet its long-term annual growth targets in the current year because of the stronger dollar.

For Wolverine, Burns maintained a Buy rating and $34 target, citing recent investments he thinks will help drive revenue growth and wider margins.

The analyst maintained a Neutral rating and $73 target on Under Armour Inc UA, and said that despite a reasonable outlook for revenue growth, its stock has "insufficient upside" potential.