Capri Holdings (CPRI) is rated "Buy" by Citi, with a target price of $29, based on a DCF analysis using a 14% discount rate and a ~5x terminal EBITDA multiple. Despite anticipated weak Q3 results, with sales expected to decline by 11% and EPS projected at $0.67, Citi believes the stock is undervalued, priced as if "nothing can go right (ever)." The report highlights potential catalysts for stock appreciation, including signs of stabilization in brand performance or discussions about selling a brand, which could provide funds to reduce debt or return cash to shareholders.
Citi notes that management has not provided specific guidance for Q3 but expects sequential sales improvement in the second half of the fiscal year. The report also mentions that foot traffic for Michael Kors improved to -3.3% in Q3 from -6.9% in Q2, while web traffic showed mixed trends across its brands. Citi's analysis suggests that any positive developments, such as brand stabilization or strategic sales, could significantly impact the stock's performance.
Capri Holdings was trading at $24.95, up 0.36% on January 24.