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 indicating strong performance and growth potential.
"With shares down ~20% since 1Q EPS, we upgrade ANF to Overweight," noted JPMorgan. They highlight continued broad-based demand at Abercrombie, with the Hollister brand showing signs of improvement. Additionally, there is a noted $400 million revenue recapture opportunity internationally.
JPMorgan raised their 2Q EPS estimate to $2.30, above the Street consensus of $2.13, and projected FY24 EPS at $9.95, exceeding the Street’s $9.51.
Furthermore, the bank anticipates revenue growth to hit +19% for 2Q, outpacing the Street's estimate of +15.7%, and set a December 2025 price target at $194, based on an 8x FY26 EBITDA multiple.
Savers Value Village (SVV) Downgrade: On the other hand, JPMorgan downgraded SVV to Neutral, placing it on a Negative Catalyst Watch.
The firm lowered the 2Q EPS estimate to $0.19, below the Street’s $0.20, and adjusted FY24 EPS to $0.68, down from the Street’s $0.74. JPMorgan explained that the downgrade reflects concerns over the macroeconomic environment in Canada, which constitutes 40% of SVV’s sales.
Furthermore, 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 2Q same-store-sales growth outlook for the company to -0.1%, driven by a softer Canada same-store-sales outlook of -3.0%.
They established a December 2025 price target of $12 for SVV, predicting continued challenges ahead.