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Abercrombie & Fitch Lifts Its Outlook—And Its Stock Drops
Key Takeaways
Apparel retailer Abercrombie & Fitch lifted its end-of-year outlook today. Its shares are falling anyway.
Some of that might be attributable to an iffy day for stocks , with the S&P 500 recently down about 3%. But the scale of Abercrombie’s ( ANF ) move—the shares were recently down about 19% to roughly $130, undoing some recent upward momentum that started around mid-December—suggests more serious investor disappointment.
The details: Abercrombie told investors to expect fourth-quarter net sales growth of 7% to 8%, up from an earlier estimate of 5% to 7%. (It also lifted its guidance for quarterly operating margins, among other things.)
It may be that investors expected a bigger upside surprise or a longer-term update. Based on Visible Alpha data, analysts were looking for quarterly revenue growth of about 7%. The preannouncement came ahead of a planned appearance by management at an investor conference Monday morning.
Some on Wall Street figured the long-term story is still good. Analysts are broadly bullish on the shares, which have climbed over the past 12 months, and Jeffries—which has a “buy” rating and a $220 price target on the stock, the latter which is substantially higher than Visible Alpha’s consensus—called today’s drop an “opportunity.”
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