G-III Apparel Group Ltd. (GIII)

G-III Apparel Group Ltd. (GIII) stock dropped by 10.56% due to a downgrade by Barclays. The investment firm downgraded G-III Apparel from Equalweight to Underweight, with a revised price target of $23, down from the previous target of $30.

• Reasons for Downgrade: Barclays cited several factors expected to impact G-III Apparel's revenue and business operations. Firstly, the firm anticipates a 2% revenue headwind over the next three years due to store closures announced by Macy's on February 27, 2024. Secondly, the loss of licenses is expected to affect G-III Apparel's business over the next five years. Lastly, there is a muted search interest in the company's owned brands, suggesting a longer timeframe may be required to address revenue challenges.
• Future Outlook and Concerns: Barclays expressed confidence in G-III Apparel's efforts to secure new licensing agreements with different brands. However, the firm highlighted limited visibility regarding potential new agreements, including their commencement and whether they will be substantial enough to replace revenues previously generated by Calvin Klein and Tommy Hilfiger businesses.
• Price Target and Earnings Estimate: The new price target of $23 is based on a 7x multiple of Barclays' calendar year 2025 earnings per share estimate for G-III Apparel, which has been revised down to $3.31 from $3.75. Barclays also raised concerns about potential risks associated with G-III Apparel's possible acquisitions outside of its core women's and outerwear businesses.