Abercrombie & Fitch (ANF) stock is down around 45% from its highs. The sell-off has been significant and arguably unwarranted, given its consistent revenue and earnings beats over the past two years. Despite offloading my shares closer to the peak, I’m bullish on ANF stock, which appears to be trading below fair value.
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With the company expected to deliver robust earnings growth in less than 30 days, there are several good reasons to suspect that ANF will bounce back into equilibrium in relation to its retail peers. Meanwhile, on Wall St., ANF’s share price targets suggest severely oversold conditions.
Another Beat Incoming for Abercrombie?
Abercrombie & Fitch will announce its Q4 2025 earnings on March 5, 2025, with analysts expecting normalized earnings per share (EPS) of $3.55 and GAAP EPS of $3.59. Revenues are projected at $1.57 billion, which represents a strong quarterly gain. However, despite seven consecutive earnings and revenue beats, recent results failed to sustain the stock’s rally. It is now trading 45% lower from its peak. This decline somewhat lowers expectations, reducing the bar for a strong beat to rejuvenate investor confidence.
Moreover, positive EPS revisions in the last 90 days (5 upward, 1 downward) indicate cautious optimism. This certainly isn’t a bad sign and hopefully points to some catalysts during the holiday season, which may have lifted sales higher.
Abercrombie is a Rejuvenated Force in Fashion
My bullishness is also centered around the brand’s revival and momentum. Abercrombie & Fitch has undergone a dramatic resurgence, transforming from a fading icon into a Gen Z and millennial favorite through strategic rebranding and operational overhauls. Since taking charge of the outfit in 2017, CEO Fran Horowitz has pivoted the company from its exclusionary past to embrace inclusivity – expanding sizing ranges, diversifying marketing campaigns, and prioritizing authenticity.
This shift aligned with evolving consumer values, driving a significant revenue increase in 2024 and a stock surge over the past year. However, year-to-date, ANF is down 25%. A digital-first strategy, including influencer partnerships and omnichannel integration, is key to its revival. The brand leveraged TikTok and Instagram to showcase modern styles, collaborating with creators across niches like gaming and lifestyle. Simultaneously, it reinvested in physical retail, opening flagship stores in London’s Oxford Street and Covent Garden with tech-enhanced experiences.
Operational streamlining – such as optimized inventory management and cost reductions – complemented these efforts. The result is a “modern casual luxury” positioning that balances nostalgia with contemporary relevance, resonating particularly with women aged 25-29 seeking versatile, Instagram-worthy wardrobes.
By marrying data-driven marketing with ethical rebranding, ANF has redefined itself as a case study in corporate agility. This proves that even legacy brands can reclaim cultural currency when they evolve with their audience.
Abercrombie’s Valuation Screams ‘Buy’
ANF’s valuation is a further reason for bullishness. The company has a forward price-to-earnings (P/E) ratio of 10.2x for 2025 and trades at a discount compared to most of its peers, including Urban Outfitters (URBN) at 14.1x, GAP (GAP) at 11.1x and Victoria’s Secret (VSCO) at 13.8x. Only American Eagle Outfitters (AEO) has a lower P/E, but Abercrombie boasts a much stronger financial position with a smaller net debt position.
Moreover, forward P/E indicates that the market expects continued earnings growth, yet prices ANF conservatively compared to its peers. This discrepancy between valuation and performance creates an attractive entry point for investors.
The company’s consensus EPS estimate growth rates show a healthy trajectory: 70% for January 2025, 7.5% for January 2026, and 6.5% for January 2027. This steady growth pattern and ANF’s history of exceeding analyst expectations suggest potential upward price catalysts are forthcoming. Although some analysts may point to the lack of a dividend, this isn’t unusual in a post-COVID market. Dividend payments may return as growth normalizes.
Is Abercrombie a Good Stock to Buy?
On TipRanks, ANF carries a Strong Buy rating based on seven Buy, two Hold, and zero Sell ratings assigned by analysts in the past three months. The average ANF stock price target is $190.75 per share, implying about 70% upside potential.
Oversold and Undervalued Abercrombie May Rise Higher
Abercrombie & Fitch appears significantly undervalued despite strong earnings growth and brand momentum. With a 70% upside target and consistent performance, the recent selloff seems unjustified.
I remain bullish on the stock and plan to reinvest, even after previously selling shares at much higher prices. Strangely, Abercrombie trades below $200 per share despite delivering steady earnings growth and maintaining a strong brand resurgence.
With potentially strong Q4 results ahead and Wall Street price targets signaling further upside, the recent decline looks overdone. The company’s operational improvements, strong demographic appeal, and digital growth position it well for the future. Trading at a low earnings multiple despite outperforming its peers, Abercrombie presents an attractive risk-reward opportunity—making this a classic buy-the-dip moment.
