Alexandra Straton, an analyst from Morgan Stanley, maintained the Hold rating on Abercrombie Fitch (ANF – Research Report). The associated price target remains the same with $114.00.
Alexandra Straton has given her Hold rating due to a combination of factors that reflect both caution and acknowledgment of potential risks. The recent earnings report from Abercrombie & Fitch highlighted some concerns, such as the potential downside to the 2025 earnings per share compared to pre-report forecasts and the risk of sales and operating margin reversion. Additionally, the narrative around the company’s rate of change appears increasingly negative, suggesting that the market’s medium-term forecasts might be overly optimistic.
Despite these concerns, the current valuation of the stock, with a price-to-earnings ratio of approximately 8x based on the midpoint of 2025 earnings guidance, seems to already account for these risks. While Abercrombie & Fitch did achieve some positive results, such as a slight earnings per share beat and notable growth in certain areas, the challenges of maintaining record operating margins amid moderating sales growth and high inventory levels remain. These mixed signals contribute to the Hold rating, as the stock’s potential upside is balanced by these underlying risks.