Argus upgrades Abercrombie & Fitch to Buy on expanded margins, lower inventories

Argus upgraded Abercrombie & Fitch to Buy from Hold with a $41 price target. The company has been transitioning away from larger-format, tourist-dependent flagship stores to smaller stores that cater to local customers while also broadening its offering to include office and special occasion clothing as well as active apparel, the analyst tells investors in a research note. Abercrombie & Fitch is also expanding margins, helped by lower freight costs, and lowering inventories as supply-chain disruptions ease, the firm noted, boosting its FY24 EPS view to $2.14 from $1.50 and its FY25 view to $2.46 from $1.70.