The firm lowered the price target to $30 from $50 for the specialty retailer of casual apparel.
Oppenheimer also lowered its annual EPS estimates to $1.64 from $2.15 for fiscal 2014, and to $1.90 from $2.50 for fiscal 2015.
The firm said it lowered the rating for Abercrombie & Fitch because of lack of visibility regarding brand turnaround, and mounting uncertainty around international sales which make near-term projections less clear.
"Lack of visibility on brand turnaround domestically (especially at Hollister, 51% total sales, given heightened competition for younger teen customer) and mounting uncertainty around international (30% of sales, ~80% profits) make near-term earnings trajectory less clear," said Oppenheimer analyst Anna Andreeva.
Separately, TheStreet Ratings team rates ABERCROMBIE & FITCH as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ABERCROMBIE & FITCH (ANF) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 13.3% when compared to the same quarter one year prior, going from $11.37 million to $12.88 million.
- Net operating cash flow has significantly increased by 124.28% to $15.81 million when compared to the same quarter last year. In addition, ABERCROMBIE & FITCH has also vastly surpassed the industry average cash flow growth rate of 20.78%.
- ANF's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that ANF's debt-to-equity ratio is low, the quick ratio, which is currently 0.69, displays a potential problem in covering short-term cash needs.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, ABERCROMBIE & FITCH's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ANF Ratings Report