JPMorgan made strategic adjustments to its stock ratings in the specialty softlines sector, telling investors in a note Monday that it is upgrading Abercrombie & Fitch to Overweight while downgrading Savers Value Village to Neutral.
Abercrombie & Fitch (ANF) upgrade: The investment bank’s upgrade of ANF comes in light of significant fieldwork and management insights that indicate strong performance and growth potential.
“With shares down ~20% since Q1 earnings per share, we are upgrading ANF to Overweight,” JPMorgan said. They highlight continued broad demand at Abercrombie, with the Hollister brand showing signs of improvement. In addition, there is an opportunity internationally to recapture $400 million in sales.
JPMorgan raised its second-quarter earnings estimate to $2.30, above the Street consensus of $2.13, and forecast fiscal 24 earnings per share at $9.95, ahead of the Street’s $9.51.
Additionally, the bank expects second-quarter revenue growth to be +19%, ahead of The Street’s estimate of +15.7%, and sets a December 2025 price target at $194, based on an EBITDA multiple of 8x FY26.
Savers Value Village (SVV) Downgrade: On the other hand, JPMorgan downgraded SVV to Neutral, placing the company on a Negative Catalyst Watch.
The company cut its second-quarter earnings estimate to $0.19, below the Street’s $0.20, and adjusted FY24 earnings per share to $0.68, down from $0.74 for the Street. JPMorgan explained that the rating downgrade reflects concerns about the macroeconomic environment in Canada, which accounts for 40% of SVV’s revenue.
Additionally, they cited weak Canadian retail sales, higher unemployment and significant cost-of-living pressures as factors impacting SVV’s performance.
JPMorgan also lowered its consolidated second-quarter same-store sales growth outlook to -0.1%, driven by a weaker same-store sales outlook in Canada of -3.0%.
They set a $12 price target for SVV for December 2025, predicting continued challenges.
