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Goldman Sachs Downgrades Abercrombie & Fitch (ANF) to Sell

October 24, 2014 7:23 AM EDT
Get Alerts ANF Hot Sheet
Price: $130.82 --0%

Rating Summary:
    10 Buy, 25 Hold, 5 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 4 | New: 36
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Goldman Sachs downgraded Abercrombie & Fitch (NYSE: ANF) from Neutral to Sell with a price target of $27 (from $34). Analyst Lindsay Drucker Mann thinks consensus is too optimistic. She noted poor trends in the U.S. and fresh weakness in Europe.

"We believe ANF could miss estimates due to: (1) deterioration in the high margin European business, (2) persistent weakness in the US, evidenced by seven consecutive quarters of negative same store sales growth, and (3) unfavorable currency movements negatively impacting 3Q and 4Q international sales on a year-over-year basis by 2% and 5%, respectively. We lower our 6-month price target to $27, which represents -18% downside and compares with +2% average upside for the group," said Drucker Mann.

"Investors have been hopeful that ANF’s comprehensive cost savings initiative would support healthy margin expansion and EPS acceleration, but we are concerned ongoing revenue and markdown pressure will eat up the bulk of these savings based on our analysis of domestic promotional activity and international brand engagement, which both show continued weakness. ANF is due to report EPS in late November, and we expect the release will be a negative catalyst for shares and inspire downward EPS revisions," she added.

For an analyst ratings summary and ratings history on Abercrombie & Fitch click here. For more ratings news on Abercrombie & Fitch click here.

Shares of Abercrombie & Fitch closed at $33.61 yesterday.



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