FBR Capital Downgrades Abercrombie & Fitch (ANF) to Underperform
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FBR Capital downgraded Abercrombie & Fitch (NYSE: ANF) from Market Perform to Underperform with a price target of $14.00 (from $19.00) to reflect recent promo trends and stock risk/reward at its current valuation.
Analyst Susan Anderson commented, "We are downgrading ANF to a Underperform from Market Perform as ANF is now up +6.1% over the past month but more importantly trades at 23x FY2 P/E, the highest in our spec retail coverage. Our U.S. checks have shown increasing promos YOY at Hollister and higher clearance for most of the quarter, which indicates Hollister comps have likely slowed from 2Q. A&F U.S. promos and clearance have also been higher YOY for most of the quarter. Additionally, ANF is up against difficult international SSS compares in 2H16 as it cycles the lowering of prices that began in 3Q15. As a result, we are lowering our total 3Q16 SSS estimate to –5.0% from –3.9% (Street at –4.1%), driven by lower U.S. and international estimates. We are also lowering our 2016 EPS estimate to $0.36 from $0.45 and versus the Street at $0.46 (see additional changes in body). Our PT goes to $14 from $19, which is potentially a ~16% downside from current levels."
Shares of Abercrombie & Fitch closed at $16.69 yesterday.
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