CFRA Upgrades Abercrombie & Fitch (ANF) to Buy
CFRA analyst Zachary Warring upgraded Abercrombie & Fitch (NYSE: ANF) from Hold to Buy with a price target of $198.00 (from $149.00).
The analyst comments "We raise our 12-month price target by $49 to $198, based on 17.2x our FY 26 (Jan.) EPS estimate and in line with the company's two-year average forward P/E multiple of 17.2x, reflecting our view that ANF's brand momentum is not a short-term trend and the company is executing better than any other U.S. apparel brand through strategic digital marketing and capitalizing on new clothing design trends. We also note the company's balance sheet leaves plenty of room for significant share repurchases. We raise our FY 25 and FY 26 EPS estimates by $1.50 to $10.00 and $4.50 to $11.50, respectively. ANF posts normalized Q2 EPS of $2.50 vs. $1.10, $0.28 above consensus estimates on revenues of $1.13B vs. $935M and $45M above estimates. Q2 gross margin expanded 240 bps Y/Y to 64.9% and operating margin expanded 590 bps to 15.5% as the company continues to improve across the board. By brand, Abercrombie revenues increased 26% Y/Y while Hollister increased 17%. We believe the sell-off pre-market provides a great opportunity."
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Shares of Abercrombie & Fitch closed at $166.61 yesterday.