GIII - G-III Apparel is viewed cautiously at Wells Fargo

Wells Fargo started off coverage on G-III Apparel Group Ltd. ( NASDAQ: GIII ) with an Equal-weight rating.

Analyst Will Gaertner and team think the risk-reward on GIII appears balanced given the lack of catalysts ahead and looming headwinds. A challenging set-up and sector backdrop is seen following a period of massive outperformance of the category during the last 12 to 18 months.

"While we are impressed by mgmt's operational prowess, share gains, and attractive FCF yield, macro headwinds continue to build and GIII faces an especially challenging set-up over the next 6-12 months. Further, GIII's worsening sales-to-inventory spread increases markdown risk in the NT."

GIII is noted to building inventory into a potentially slowing demand environment.

The firm's price target of $20 on GIII reflects a multiple of 3X the 2024 EBITDA estimate.

The Seeking Alpha Quant Rating on GIII is flashing Strong Buy.

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