Canada Goose ( NYSE: GOOS ) shares were downgraded to In-Line from Outperform at Evercore ISI as the firm indicated long-term sales targets may be overly ambitious.
“Although Canada Goose could be one of the best positioned brands to recapture Chinese spend that until now has been lost to COVID lockdowns, we are moving to the sidelines from Outperform to In-Line given management's needlessly aggressive new long-term financial targets,” the firm’s analysts advised.
In particular, an aim to nearly triple sales to $3B over the next 5 years and expand EBIT margin by about 11% in that span were cited as over-optimistic. The lack of focus on “extreme cold expertise” is also misplaced, in the firm’s view.
“While we understand the need and desire to transition the brand into a year round luxury resource, investors should be aware that many of the new areas of management's focus (women's, new stores, fashion, footwear, home, sneakers, new HQ, et. al.) are in more competitive markets and will likely come with lower margins than its core parka business,” the note concluded.
Shares of the Toronto-based apparel manufacturer fell 3.96% in premarket trading.
Read more on the company’s five-year outlook .
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Canada Goose cut to Hold as Evercore questions long-term targets