Abercrombie & Fitch (ANF) stock has plunged this year, erasing some of the gains made in 2023 and 2024, when it emerged as the best-performing retail stock. ANF has plunged to a low of $100, its lowest level since January 29. So, is the ANF stock a good buy ahead of its earnings report?
Abercrombie & Fitch growth has eased
ANF has been one of the top performing companies in the retail industry in the past few years, a move that investors attribute to the management’s turnaround efforts.
Abercrombie & Fitch’s revenues have grown from $3.12 billion in 2021 to over $4.2 billion in 2023. The trailing twelve month (TTM) revenue jumped to over $4.8 billion, as many young people switched to its business.
The company has also become highly profitable as its annual net profit jumped to $328 million in 2023 and $537 million in the trailing twelve months.
This growth helped to supercharge its business and its stock price, which jumped from $13.6 in 2023 to nearly $200 in May last year.
There are concerns that its business trajectory may be slowing. The most recent financial results showed that Abercrombie & Fitch’s revenue rose by 14% to $1.2 billion, helped by its core A&F and Hollister brands, which are having similar growth patterns.
Its Americas net sales rose by 14% to $986 million, while the EMEA division grew by 15% to $182 million and the smaller APAC region grew by 32% to $41 million.
The main concern is that Abercrombie & Fitch may be peaking. Analyst expect that its annual revenue in 2024 was $4.93 billion, a 15% annual increase, followed by $5.28 billion in 2025. That will translate to a slowdown from 15% to 7%.
ANF earnings ahead
The next important catalyst for the ANF stock price will be its financial results, which will come out on March 5.
These results will provide more color about its business and whether it continued to attract more customers during the quarter.
The average estimate is that Abercrombie & Fitch revenue will be $1.57 billion, a 7.9% increase from the same period a year earlier. The forward guidance, which is what most analysts focuses on, is expected to be $1.08 billion, a 6.2% annual growth rate.
ANF’s earnings per share are expected to come in at $3.56, higher than the $2.97 it made a year earlier. This will lead to an annual EPS of $10.68. Odds are that the company’s earnings per share will be better-than-expected as it has done in the past few quarters.
Analysts are generally upbeat about the ANF stock price, with the average estimate being $177, higher than the current $101.4.
Read more: Abercrombie & Fitch stock: the moment of clarity nears
ANF stock price analysis
ANF stock chart | Source: TradingView
The best way to explain the ongoing Abercrombie & Fitch stock price action is known as the Wyckoff Theory. As shown above, the stock remains in a tight range for years. This range-bound price action is part of the accumulation phase of this theory.
ANF stock price then entered the markup phase and surged from $13 in 2023 to near $200. The markup phase is characterized by higher demand and the fear of missing out, commonly known as FOMO.
It has remained in the distribution phase since May 2024 when it surged to a record high. This phase is characterized by an intense battle between bulls and bears in the market.
Abercrombie & Fitch stock has now crashed below the support at $121.70, its lowest level on August 5 and $108.70, its lowest swing in April.
Most importantly, it has moved slightly below the 50% Fibonacci Retracement point at $100, a move that will trigger panic selling among investors. Therefore, the ANF share price will crash to $80, its 61.8% retracement point. This view is about 21% below the current level, followed by $47.75, down by 52% from the current point.
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