Capri Holdings (NYSE: NYSE:CPRI) was downgraded from Buy to Neutral by a Citi analyst, with a price target set at $41.00. The decision came as the share price approached within 5% of the target, prompting a reassessment of the stock's risk/reward balance. Despite ongoing legal challenges faced by the company, the analyst maintained a view that the Federal Trade Commission's (FTC) opposition to the Tapestry/Capri deal is unfounded.
The recent court proceedings during this week have not altered that perspective.
The analyst's stance on the stock has been influenced by the potential outcomes of the FTC's challenge, which is currently under judicial review.
The uncertainty of the judgment, which rests in the hands of a single judge, was cited as a factor beyond the analyst's expertise. This uncertainty has led to a more cautious outlook on the stock's future performance.
Capri Holdings was previously upgraded on June 27, 2024, in light of a favorable risk/reward scenario at the time. The analyst applied probability weighting to three possible outcomes to derive the $41 price target. However, with the stock now nearing this target, the perceived advantage has diminished.
The current price target reflects a modest upside from the stock's recent trading levels.
The analyst's revision suggests that the stock's potential gains are now more evenly matched with potential risks, leading to a neutral position on Capri Holdings.
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