Abercrombie & Fitch (NYSE:ANF) has achieved an outstanding performance this year, reaching a record high and boasting a nearly +300% increase in its stock value through Thursday’s close. This marks the company’s best annual performance since going public in 1996, surpassing even Nvidia’s +240% gain during the same period. Abercrombie’s success has also contributed to the S&P Retail Select Industry Index, which gained 21% this year.
Abercrombie’s Turnaround from 2022
The remarkable turnaround for Abercrombie follows a challenging year in 2022, where its shares fell by -34% amid economic uncertainties and cautious consumer behavior. However, the company rebounded as sales picked up, and excess inventory was cleared, reflecting the return of shoppers to work, school, and social activities post-pandemic.
Optimistic Outlook and Analyst Assessments
Argus Research recently raised Abercrombie’s price target to $97, expressing confidence in the company’s continued momentum with higher sales and margins throughout the holiday season. The positive outlook aligns with the brand’s popularity among young millennial and Gen Z shoppers. Abercrombie’s CEO highlighted the brand’s expansion into various categories beyond the traditional jeans and T-shirt image.
Despite the bullish stance, most analysts remain neutral on the stock. Approximately one-third of analysts covering Abercrombie have given it a buy-equivalent rating, with an average price target of $78, suggesting a -13% decrease from the current trading levels. The stock experienced a slight setback, falling over -4% from its record high, following Abercrombie’s announcement of plans to shift to air freight, aiming to avoid disruptions in shipping through the Red Sea. This move could potentially raise shipping costs and impact profits.
Analyst Expectations for Q4
While some analysts express optimism about Abercrombie’s ability to maintain its sales momentum and deliver strong profits, others acknowledge the challenges of meeting high expectations. Citigroup believes that Abercrombie’s positive momentum can continue, though achieving further upside against already elevated expectations may prove more challenging. Analysts have increased their Q4 adjusted earnings-per-share expectations for Abercrombie by more than 30% in the past month, indicating confidence in the company’s performance in the near term.
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