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Abercrombie & Fitch In Free Fall After Q1 Print, Bull Analysts Nowhere To Be Seen

Brett Hershman
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Shares of Abercrombie & Fitch Co. (NYSE: ANF) have dropped nearly 50 percent over the past month. The retailer reported a first quarter earnings and sales beat Wednesday, but issued weak second-quarter guidance. The stock was down 4.79 percent at the time of publication Thursday.

'Further Downside Risk'

Abercrombie shares have further downside risk, as the company’s implied guidance is not conservative, Bank of America Merrill Lynch analyst David Buckley said in a Wednesday note.

“We remain doubtful that ANF can drive the kind of second half comp and gross margin improvement that is implied by fiscal year guidance," the analyst said.

BoFA reiterated an Underperform rating and lowered the price target from $20 to $16.

Wedbush Comfortable With Underperform Rating

Even as shares fell 25 percent following Abercrombie's first-quarter print, Wedbush is still comfortable with an Underperform rating, as trends show deteriorating weekly cadence in May and unexpected weakness at Hollister, Wedbush analyst Jen Redding said in a Wednesday note.

“At a minimum, guidance appears dependent on improving intra-quarter trends, and for now, we’re not seeing signs of improvement at Abercrombie or Hollister, a view bolstered by similar insights from our revenue and margin data, mirroring bleak trends as the Memorial Day Holiday period closed across most of our data coverage,” the analyst said.

Wedbush maintained an Underperform on Abercrombie and lowered the price target from $23 to $16.

Baird: Tariff Uncertainty Pressures Valuation

With trade and tariff overhangs, Abercrombie's valuation could remain under pressure in the short run, Baird analyst Mark Altschwager said in a Wednesday note.

“The company’s F2019 comp/margin outlook now implies re-acceleration in F2H19 - which could prove aggressive should the apparel retail backdrop not show signs of firming soon,” the analyst said.

View more earnings on ANF

Baird maintained maintains a Neutral rating and lowered the price target from $25 to $22.

Morgan Stanley: Turnaround Remains Work In Progress

Abercrombie’s turnaround remains a work in progress, with 2019 EBIT dollar growth appearing elusive, Morgan Stanley analyst Kimberly Greenberger said in a Wednesday note.

“All in, while ANF grew 2018 operating income dollars by $49M y/y, we think it could struggle to grow in 2019, and instead could give back some of those gains; investors may have come to the same conclusion given the stock’s - 27% decline on the print after trading at a 3-year high earlier in 2019.”

Morgan Stanley maintained an Underweight rating with a $15 price target.

Price Action

Abercrombie shares were down 4.62 percent at $17.54 at the time of publication Thursday.

Related Links:

Is Abercrombie & Fitch Back In Fashion With The Street?

Abercrombie & Fitch Gains Following Upbeat Q4 Results; Valeritas Shares Slide

Photo by Henning Schlottmann/Wikimedia.

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