Boasting sales growth and margin improvement, Canada Goose Holdings Inc. Subordinate Voting Shares GOOS outperformed Street estimates this quarter. But the beats didn’t do much good.
The stock opened up 6.4 percent on Goose’s Thursday morning earnings report but promptly slid 8.6 percent off the high. It ended the day down 3 percent.
Analysts offered two interpretations of the market’s reaction.
Milked For All It’s Worth
Nomura considered the stock slide a reflection of met expectations. The firm predicted and continues to predict Canada Goose to post beats — just like everyone else does.
“We continue to expect industry leading revenue growth driven by the strength of the brand equity, but at current valuations, we believe that upside remains priced in,” Nomura analysts wrote Friday.
They maintain a Neutral rating on the stock with a $26 price target.
Peeking Out
Meanwhile, Barclays attributed Thursday’s plunge to disappointment in the lack of raised annual outlook. The quarterly beat did not correspond with anticipated guidance hikes.
Unlike investors, Barclays didn’t find this unusual.
“It is important to note that [the] first quarter is historically GOOS’s smallest quarter by a wide margin (about 4 percent of sales in fiscal year 2017), so we would argue a revision may have proven premature,” analysts Jim Durran (see his track record here) and James Allison wrote in a Friday note.
Nonetheless, they expressed confidence that Canada Goose will outperform in the present fiscal year, particularly as in-house production increases and retail store rollout accelerates.
Barclays maintains an Overweight rating on the stock and raised its price target from $30 to $31.
At time of publication, shares of Canada Goose were up ~3 percent at $18.86.
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