Millennial and Gen-Z apparel retailer Abercrombie & Fitch is the IBD Stock Of The Day for Friday. ANF stock is flashing an early entry in a new base.
Abercrombie & Fitch soared 343% from a May 2023 breakout to its March 2024 peak. The company beat earnings estimates and reported triple-digit earnings growth over the last four quarters. Meanwhile, revenue growth accelerated over the last four periods.
Argus on April 11 hiked its price target on ANF stock to $130 from $97, noting the company is benefiting from growth in average unit retail sales and supply chain improvements that allow it to replenish popular inventory more quickly, The Fly reported. Meanwhile, Abercrombie management has repositioned the brand and expanded its clothing lines to include office, athletic and formal attire. Abercrombie in March launched the A&F Wedding Shop, which offers over 100 products for brides, bachelorettes and guests. Argus raised its 2025 EPS forecast for Abercrombie & Fitch to $7.64 per share from $5.79. The firm kept a buy rating on the stock.
Abercrombie on March 6 reported a 267% earnings increase to $2.97 per share to beat estimates of $2.82 per share. Revenue jumped 21% to $1.453 billion, vs. FactSet predictions of $1.429 billion.
Abercrombie & Fitch guided 2024 sales to increase 4% to 6% from the $4.3 billion in 2023, but slowing from the 21% jump last year.
Abercrombie Outlook
Telsey Advisory lifted its price target on ANF stock on its Q1 results, noting the Abercrombie & Fitch brand remains healthy with a resilient customer base, while its Hollister brand is showing signs of improvement, The Fly reported. Telsey sees an opportunity for margin expansion through digital growth and greater retail space productivity. The firm raised its target on ANF stock to $152 from $140 and maintained an outperform rating on the shares.
Morgan Stanley also hiked its target for ANF to $103 from $81, noting "decade-high profitability levels" and a guidance ahead of Wall Street estimates. However, Morgan Stanley says there could be downside risk over the next 12 months despite momentum in the first half of the year. The firm cautioned that Abercrombie's profitability forecasts "could prove optimistic," The Fly reported. Morgan Stanley kept an equal weight rating on Abercrombie stock.
Abercrombie reports first-quarter results on May 29. The company forecasts low double-digit sales growth, up from $836 million for Q1 last year.
FactSet analysts expect earnings to increase nearly 295% to $1.54 per share on 12.8% revenue growth to $943 million.
However, comparisons get a lot tougher now. Wall Street forecasts earnings and revenue growth slowing in Q2 and Q3, with EPS actually declining in Q4.
Abercrombie Stock
ANF stock is moving decisively above its 50-day moving average, clearing highs from the past few sessions. It's also arguably clearing a tight trendline. All that is offering an early entry.
Shares have an official 140.28 buy point for its two-month consolidation.
ANF stock has a 96 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. Shares have a 77 EPS Rating. Abercrombie's relative strength line is near 52-week highs with a perfect 99 RS Rating.
Abercrombie & Fitch leads the 32-stock Retail-Apparel/Shoes/Accessories Group, according to the IBD Stock Checkup.
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