Morgan Stanley raised the firm’s price target on Abercrombie & Fitch to $103 from $81 and keeps an Equal Weight rating on the shares. Shares traded down 4% yesterday despite a Q4 beat, “decade-high profitability levels” and Q1 and FY24 guidance that were above both Street and buyside expectations, which the firm attributes to the stock’s outsized recent rally and “well-appreciated upside.” Despite likely first half momentum, the firm thinks the risk-reward skews to the downside over the next twelve months as it models FY24 EPS below guidance given its fear that management’s profitability assumptions “could prove optimistic,” the analyst tells investors.
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