Gildan Activewear’s ( NYSE: GIL ) price target was cut down a size on Tuesday by TD Securities as unkind macroeconomic conditions curtail upside expectations.
The bank’s analyst Brian Morrison advised clients that rising inflation and interest rates should impact the company’s prior guidance negatively and sets management up for a disappointment. While Morrison clarified that he remains constructive on the stock overall, the near term noise necessitates a revisiting of targets.
“We believe it is prudent to lower our 2023 financial forecasts modestly, based on a slowing North American economic growth outlook,” he wrote. “The slowing growth profile, along with heightened fears of recession/economic slowdown, in our view, warrant the lowering of our target multiple, and in turn our target price.”
Morrison added that while he views the recent decline of over 20% since early May as “excessive”, it is understandable amid the recession fears and dearth of catalysts to offset these fears. As such, he retained his “Buy” rating on shares, but cut his price target from $51 to $43.
“We believe improved earnings visibility for 2023 is required to lead to an expansion of the current applied multiple that we view as punitive,” he concluded.
Shares of the Canadian apparel company fell over 4.5% on Tuesday, extending stark declines over the past year and trending at less than $1 above the stock’s 52-week-low.
Read more on UBS’ selection of the stock as a “high conviction” pick .
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Gildan price target cut at TD Securities as macro conditions hurt outlook