Wunderlich: Abercrombie Still A Sell

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In a report published Tuesday, Wunderlich analysts maintained a Sell rating on
Abercrombie & Fitch Co
ANF
, while reducing the price target from $17 to $15. Abercrombie & Fitch is expected to report poor first-quarter results. "We believe, given continued YoY double-digit AUR declines in our pricing surveys and further material discounts and continued weakness in the international segment, that Street expectations for a loss per share of $0.34 and comps of -9.1% could prove aggressive," the analysts mentioned. "We view 1Q as another quarter of management failing to find any material sustainable positive shifts to offset a loss of the company's image and fashion direction," the analysts added. The company's poor performance is attributable to the negative impact of currency related issues in the high margin international business and a drop in tourist traffic in the domestic market. In the report Wunderlich noted, "We believe ANF makes a material level of domestic profit from tourist stores. Furthermore, the shift to non-logo looks has not been accompanied by increases in consumer traffic or the ability to drive full price selling; we believe the company still has not hit bottom." The EPS estimates for FY16 and FY17 have been reduced from $1.12 to $0.21 and from $1.22 to $0.63, respectively.
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Posted In: Analyst ColorPrice TargetReiterationAnalyst RatingsWunderlich
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