Capri Holdings Limited (NYSE:CPRI) was cut to Hold from Buy, with its price target lowered to $45 from $58 by Jefferies analysts on Tuesday.
The analysts explained in the note that the risk/reward for the stock is balanced, and the firm is becoming more selective in the sector.
"We d/g to Hold as we see underappreciated macro, brand and channel risk to estimates which would further challenge sentiment," the analysts wrote.
The analysts noted that alt data trackers across web, search, pricing, brand heat, and market share suggest a slowing of trends for the company's Michael Kors brand.
"LY CPRI raised its LT MK sales outlook from $4.4B to $5B as mgmt. believed it could elevate the brand. However, we believe sentiment has been challenged as the co. has discussed recent elasticity (pausing price increases, +25% since '19), while Q3 wholesale (namely dept stores) sales were esp. weak (and dept store sales worsened in March). In addition to alt data that suggests brand momentum is slowing, we see risk to FY24 guide (we are -5% vs. cons) given a likely recession," said the analysts.
While the firm still views CPRI as a quality business long-term, they prefer TPR in affordable luxury.