On Thursday, Jefferies adjusted its outlook on Capri Holdings (NYSE:CPRI), reducing the stock price target to $38 from the previous $57, while maintaining a Hold rating on the stock. The decision came after Capri Holdings reported fourth-quarter sales and earnings per share that significantly fell short of analysts' expectations. The company's sales trends are facing challenges, and promotional activities have increased.
The operating income rate showed a steeper year-over-year decline this quarter, falling 36% compared to the 33% drop in the previous quarter. Jefferies has revised its fiscal year 2025 estimates downward in light of these results. The analyst noted that in the event of a breakup scenario following the anticipated acquisition of TPR, Capri Holdings' share price might reach the high-teens to low-20s range.
The new stock price target of $38 is reflective of the potential outcomes of the ongoing deal. Management at Capri Holdings is expected to continue to advocate for the acquisition, despite challenges from the Federal Trade Commission (FTC). The updated price target represents Jefferies' assessment of the deal's likelihood and its impact on the company's valuation.
InvestingPro Insights
Amidst the challenges highlighted by Jefferies, Capri Holdings (NYSE:CPRI) exhibits some notable financial metrics and market behaviors worth considering. According to real-time data from InvestingPro, Capri Holdings has a gross profit margin of 64.94% over the last twelve months as of Q3 2024, underscoring their ability to maintain impressive profitability in their operations.
Moreover, the company's stock is trading near its 52-week low, with a price of $34.18 at the previous close, which could signal a potential entry point for investors considering the stock's historical performance and current valuation.
InvestingPro Tips further reveal that management's aggressive share buybacks and the stock being in oversold territory based on the Relative Strength Index (RSI) could indicate underlying confidence in the company's value proposition and a possible rebound.
For investors seeking more comprehensive analysis, there are additional InvestingPro Tips available that delve deeper into Capri Holdings' financial health and stock performance. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a wealth of insights that can inform investment decisions.
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