Citigroup adds Abercrombie & Fitch to positive catalyst watch ahead of Q2 results

Abercrombie & Fitch (NYSE:ANF) hopes to extend its run of better-than-expected quarterly results when the retailer reports on August 28, and with the help from trend-right fashion and acceleration in Hollister Men’s, Citigroup is looking for another strong quarter and a hike in FY24 sales guidance.

The bank sees favorable risk/reward into Q2 EPS and opens a 30-day positive catalyst watch in anticipation for another very strong quarter and management’s confidence in sustaining Abercrombie & Fitch’s (ANF) outsized comparable sales growth.

Citigroup analyst Paul Lejuez raised his Q2 EPS estimate to $2.41 from $2.23 (vs $2.25 SA consensus estimate) based on stronger sales at both A&F and Hollister and stronger gross margins. For FY24, Lejuez hikes his EPS guidance to $10.64/$11.88 from initial guidance of $10.28/$11.70.

Lejuez anticipates a similar move from management in FY24 guidance to +12% from +10% along with positive comments about back-to-school selling, along with a hike in EPS and EBIT guidance.

“While shares have traded lower on weaker third-party data in July, we see no signs of momentum slowing at either (A&F, Hollister) stores and still see significant earnings upside versus consensus this year,” Lejuez said in Tuesday’s research note.

The analyst maintained his Neutral rating on Abercrombie & Fitch (ANF) and $190 target price.

Seeking Alpha authors and Wall Street analysts are mixed on Abercrombie & Fitch (ANF), with SA authors rating the stock as a Hold, while Wall Street analysts give A&F a Buy rating. SA’s Quant rating views the stock as a Strong Buy.