BTIG downgraded Canada Goose Holdings (GOOS) to Sell from Buy and lowered the price target from C$50 to C$35, or $26.94 (24.3% downside potential).
BTIG analyst Camilo Lyon said, “Our expectation for a revenue ramp into holiday has not materialized thus far, and as such is putting FQ3 (which represents over 100% of earnings for the year) at risk of missing consensus estimates… While we continue to hold the brand and the company in high regard, we believe a lackluster sales recovery stemming from a warmer start to winter and ensuing weak digital demand will weigh on the stock until more tangible catalysts emerge that reflect an improving earnings recapture potential, likely not until next summer.”
Lyon added, “Given our new concerns about underwhelming demand, we believe the risk/reward has become disproportionately skewed to the downside. With macro pressures likely persisting through year-end, we see multiple compression ensuing on soft FQ3 earnings expectations.”
Earlier, Canada Goose reported better-than-expected 2Q results. Its adjusted EPS of C$0.10 beat the consensus estimate of C$0.08. Moreover, its 2Q revenue of C$194.8 million ($148.6 million) also came in ahead of the Street’s C$148.3 million ($113.2 million) estimate.
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 10 Buys, 1 Hold and 3 Sells. The average price target stands at $38.21 and implies upside potential of about 7.3% to current levels. Shares are down by about 1.8% year-to-date.