Wall Street Doesn’t Foresee Much More Upside for Guess This Year

Comparing Wall Street’s outlook on Guess with peers

The five analysts that cover Guess (GES) gave the stock a 2.6 on a scale where one is a “strong buy” and five is a “strong sell.” The company has a better rating than apparel peers Gap (GPS) and Abercrombie & Fitch (ANF), which are rated 3.0 and 2.9, respectively. Urban Outfitters (URBN) and American Eagle Outfitters (AEO), however, have a better ranking of 2.5.

Wall Street Doesn’t Foresee Much More Upside for Guess This Year

Comparing recommendations

Two of the five investment firms suggest buying the stock. B. Riley upgraded Guess from a “neutral” to a “buy” rating at the end of February, citing strong earnings upside and cheap valuations. Three firms including KeyBanc and Cowen & Company have a “hold” rating on Guess. There aren’t any “sell” recommendations on the company.

Target price

Guess is currently trading at $25.45, close to its 52-week high price. Wall Street doesn’t foresee any further upside for Guess this year. The company has been assigned an average target price of $19.64, which indicates a 23% downside over the next 12 months.

The stocks of most apparel retailers are trading close to their highs. As a result, share prices of most of the stocks are projected to fall over the next year. ANF, URBN, and AEO, for instance, have downsides of 17%, 5%, and 7% from their current trading prices.

Valuations

Guess is currently trading at a one-year forward price-to-earnings ratio of 26x versus a three-year average of 23x. It trades at a premium to apparel retailers Gap at 12x, Urban Outfitters at 18.7x, and American Eagle Outfitters at 15.5x. Abercrombie & Fitch at 34x is among the few apparel players that are expensive compared to Guess.

Investors wanting to get exposure to Guess through ETFs can consider the SPDR S&P Retail ETF (XRT), which invests 2% of its holdings in Guess.