On Wednesday, KeyBanc Capital Markets adjusted its outlook on shares of G-III Apparel (NASDAQ:GIII), increasing the price target to $40.00 from the previous $34.00, while reaffirming an Overweight rating on the stock. Currently trading at $34.87 and with a modest P/E ratio of 9.2, the stock has shown remarkable momentum with a 28.81% gain over the past six months.
The adjustment follows G-III Apparel's financial performance report, where the company revealed a slight miss in revenue but surpassed earnings per share (EPS) expectations by approximately $0.30.
G-III Apparel announced third-quarter revenue of $1.09 billion, marking a 1.8% year-over-year increase, along with an adjusted EPS of $2.59. Despite a contraction in gross margin by 85 basis points, attributed to a higher proportion of sales in licensed brands, the company maintained a healthy gross margin of 40.21%.
The company highlighted a notable rise in strength within its key owned brands. This growth is seen as a counterbalance to the challenges arising from transitions in licenses with PVH Corp (NYSE:PVH). InvestingPro analysis reveals 8 additional key insights about G-III's performance and potential.
The firm's updated financial guidance for fiscal year 2024 reflects an optimistic bottom-line outlook. G-III Apparel's strategic focus on expanding higher-margin owned brands and exploring additional licensing opportunities is expected to drive earnings outperformance in the near term.
KeyBanc's revised price target is based on a 9.2 times multiple of the estimated EPS for 2025, signaling confidence in G-III Apparel's potential for continued financial success despite the current challenging environment. The company's efforts to grow its owned brand portfolio and capitalize on new licensing opportunities appear to be key factors in this positive assessment.
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