JPMorgan has made significant changes to its stock ratings in the specialty softlines sector. They upgraded Abercrombie & Fitch and downgraded Savers Value Village. This update came in a note to investors on Monday.
Upgrade of Abercrombie & Fitch
JPMorgan upgraded Abercrombie & Fitch (ANF) to Overweight. This decision was based on thorough fieldwork and managerial insights. The investment bank noted solid performance and growth opportunities.
Reasons for the Upgrade
JPMorgan highlighted Abercrombie’s sustained popularity. They also pointed to the improving Hollister brand. An opportunity to recoup $400 million in international revenue was identified.
EPS and Revenue Projections
JPMorgan forecasted FY24 EPS at $9.95, above the Street’s $9.51 projection. They increased their 2Q EPS prediction to $2.30, higher than the Street average of $2.13.
Price Objective
JPMorgan set a December 2025 price objective of $194 for Abercrombie & Fitch. This is based on an 8x FY26 EBITDA multiple.
Downgrade of Savers Value Village
Conversely, JPMorgan downgraded Savers Value Village (SVV) to Neutral. They also placed it under a Negative Catalyst Watch. The downgrade is linked to macroeconomic concerns in Canada, which accounts for 40% of SVV’s sales.
Revised EPS Projections
The bank revised FY24 EPS to $0.68, down from the Street’s $0.74. They reduced the 2Q EPS projection to $0.19 from the Street’s $0.20. This revision reflects anticipated challenges.
Impact of Canadian Economy
JPMorgan cited cost-of-living constraints and lower retail sales in Canada. Increased unemployment also affects SVV’s performance. These factors contributed to the downgrade.
Same-Store Sales Growth
JPMorgan reduced its consolidated 2Q same-store sales growth projection to -0.1%. This adjustment is mainly due to a weaker outlook of -3.0% for same-store sales in Canada.
Price Target for SVV
JPMorgan set a price target of $12 for Savers Value Village by December 2025. This reflects the anticipated difficulties ahead. JPMorgan’s strategic changes reflect thorough analysis and anticipation of market trends. The upgrade of Abercrombie & Fitch and downgrade of Savers Value Village highlight differing growth prospects and challenges.
Why did JPMorgan upgrade Abercrombie & Fitch?
JPMorgan upgraded ANF due to solid performance and growth opportunities.
What are Abercrombie & Fitch’s EPS projections?
JPMorgan forecasted FY24 EPS at $9.95, above the Street’s $9.51 projection.
Why did JPMorgan downgrade Savers Value Village?
SVV was downgraded due to macroeconomic concerns in Canada and anticipated challenges.
What are Savers Value Village’s revised EPS projections?
The bank revised FY24 EPS to $0.68, down from the Street’s $0.74.
What is the price target for Savers Value Village?
JPMorgan set a price target of $12 for SVV by December 2025.
