- Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Capri Holdings Ltd CPRI and lowered the price target from $60 to $54.
- The company’s Q2 earnings topped estimates, led by topline growth and operating margin expansion across all three brands, said the analyst.
- Telsey added that the moderation in the outlook despite a strong Q2 performance reflected ongoing macro uncertainties, increased FX pressure, and the continued impact of COVID-related restrictions in China.
- The analyst cited that the management pointed to the ongoing impact of COVID-related disruptions in China as contributing to the reduced topline guide for the full year.
- Management reminded investors that the decision to operate with elevated inventory levels was deliberate, as new programs were implemented to receive seasonal product earlier and hold more core inventory given ongoing supply chain disruptions.
- Within the back half, the Q3 guide came in below expectations speaking to the challenging operating environment expected in the all-important holiday quarter, while the Q4 revenue and EPS guidance largely unchanged.
- While Capri announced a new $1 billion share repurchase authorization that can help support the stock, Telsey remains cautious over the broader global macro slowdown, inflationary pressures, shifting consumer demand patterns, continued disruptions in China, and still elevated inventory levels.
- Price Action: CPRI shares are trading higher by 8.27% at $48.57 on the last check Thursday.
- Photo Via Company
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