Abercrombie & Fitch Co. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Shareholders will be ecstatic, with their stake up 36% over the past week following Abercrombie & Fitch Co.'s (NYSE:ANF) latest third-quarter results. The result was positive overall - although revenues of US$1.3b were in line with what the analysts predicted, Abercrombie & Fitch surprised by delivering a statutory profit of US$2.36 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the consensus forecast from Abercrombie & Fitch's nine analysts is for revenues of US$5.48b in 2027. This reflects an okay 5.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 8.6% to US$10.14 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$5.45b and earnings per share (EPS) of US$10.33 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

See our latest analysis for Abercrombie & Fitch

The consensus price target rose 6.6% to US$107despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Abercrombie & Fitch's earnings by assigning a price premium. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Abercrombie & Fitch analyst has a price target of US$130 per share, while the most pessimistic values it at US$90.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Abercrombie & Fitch's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Abercrombie & Fitch's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 4.6% growth on an annualised basis. This is compared to a historical growth rate of 9.8% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.3% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Abercrombie & Fitch.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Abercrombie & Fitch going out to 2028, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 4 warning signs for Abercrombie & Fitch (2 can't be ignored!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.