WWW - Stifel downgrades Allbirds Wolverine PLBY in downbeat retail review

Stifel analyst Jim Duffy cited numerous retail and lifestyle brands as areas due for drawdowns, with downgrades of specific names leading his reassessment.

The analyst reduced estimates across numerous prominent names in the retail sector operating within footwear, sporting goods, lifestyle, apparel, and specialty retail verticals.

“High inventories, lower traffic, and early promotions lead us to cut estimates for nearly all companies in our coverage,” Duffy explained. “Our revised base case assumes a soft landing for the U.S. (no recession) but that inventory imbalances and promotion pressures margin and revenue.”

Under these conditions, Duffy expects that current consensus estimates are “too ambitious” with historical precedent suggesting multiple revisions of expectations are necessary before the sector bottoms. In total, 20 different stocks across the retail and lifestyle space saw price target’s trimmed. Notable price target cuts included a reduction in Lululemon’s ( LULU ) price target from $500 to $381, Columbia Sportswear ( COLM ) from $100 to $81, and Skechers ( SKX ) from $61 to $45.

In addition to price target cuts, Allbirds ( NASDAQ: BIRD ) -2.43% , Wolverine World Wide ( NYSE: WWW ) -0.13%, and PLBY Group ( NASDAQ: PLBY ) -0.58% were each downgraded from “Buy” to “Hold”. In each case, the downgrade reflected a turn to an “unfavorable risk/reward” dynamic and show diminished upside in the current environment than was previously anticipated.

“The better brands/models can outperform on a relative basis for a time but, in a storm, there is no safe port and the Buy signal is not until there is a break in the clouds and hope for the weather to clear,” Duffy wrote, summing up his more cautious turn.

To be sure, there were some outperformers that prompted price target increases despite the broadly bearish outlook. Decker Outdoors ( DECK ), Dick’s Sporting Goods ( DKS ), and VF Corporation ( VFC ) made up the “Buy” rated stocks with paradoxically raised price targets.

Read more on B. Riley Securities’ bullish bet on footwear stocks .

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