Pali Research Initiates Coverage on Abercromie & Fitch (ANF) with a Sell
ANF Hot Sheet
Rating Summary:12 Buy, 16 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
Pali Research initiates coverage on Abercromie & Fitch (NYSE: ANF) with a Sell. Price target $18.
Pali analyst says, "The factors that contribute to ANF's iconic status and drive the long-term story are the liabilities today. Our $18 TP is based on 8x our 09E EPS of $2.25, which is 30% below consensus and could go lower...We think ANF is boxed in a corner on price. It has not and will not promote to drive short-term sales and has taken up price points on select categories. The nonconformist approach to holding price will benefit the brands in a recovery and is essential for international growth. However, in this current (and likely prolonged) environment, a consumer with less money can't afford to pay up, particularly for stale product...Tourism has provided a meaningful benefit but that could change with a strengthening dollar and slowing global economies. We estimate every point of comp lost in tourism stores could further erode EPS by ~2 cents."
Abercrombie & Fitch Co. (A&F, through its subsidiaries, is a specialty retailer that operates stores and Websites selling casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories for men, women and kids.
Pali analyst says, "The factors that contribute to ANF's iconic status and drive the long-term story are the liabilities today. Our $18 TP is based on 8x our 09E EPS of $2.25, which is 30% below consensus and could go lower...We think ANF is boxed in a corner on price. It has not and will not promote to drive short-term sales and has taken up price points on select categories. The nonconformist approach to holding price will benefit the brands in a recovery and is essential for international growth. However, in this current (and likely prolonged) environment, a consumer with less money can't afford to pay up, particularly for stale product...Tourism has provided a meaningful benefit but that could change with a strengthening dollar and slowing global economies. We estimate every point of comp lost in tourism stores could further erode EPS by ~2 cents."
Abercrombie & Fitch Co. (A&F, through its subsidiaries, is a specialty retailer that operates stores and Websites selling casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, outerwear, personal care products and accessories for men, women and kids.
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