On Friday, KeyBanc has increased the stock price target for G-III Apparel Group Ltd. (NASDAQ:GIII) to $34 from the previous $32 while maintaining an Overweight rating on the stock. This adjustment follows the company's recent financial performance, which included a revenue report that met expectations and an earnings per share (EPS) figure that exceeded estimates by approximately $0.25.
The company's second-quarter revenue was reported at $644.8 million, a slight decrease of 2% year-over-year, but it managed to achieve an adjusted EPS of $0.52.
G-III Apparel's gross margin saw an expansion of 86 basis points, attributed to a higher penetration of the company's higher-margin owned brands and robust sell-through rates. The financial update also highlighted the recent announcement of a global licensing agreement with Converse for men's and women's apparel, which is expected to launch in Fall 2025. This new partnership is anticipated to grow to approximately $200 million within a reasonable timeframe.
The positive developments come as G-III Apparel continues to skillfully navigate the phase-out of licenses from PVH Corp (NYSE:PVH). The addition of the Converse license is seen as a strategic move that enhances the company's portfolio of licensed and owned brands. The analyst from KeyBanc expressed a positive outlook on G-III's strategic management and the opportunities presented by the new and ongoing brand relationships.
The raised price target to $34 is based on 8.2 times the firm's estimated earnings per share for the year 2025. The Overweight rating reflects the analyst's confidence in G-III Apparel's prospects and its ability to maintain a strong performance in the market.
In other recent news, G-III Apparel Group reported second-quarter fiscal 2025 earnings that met market expectations, with net sales of $645 million. The company also announced a new global agreement with Converse, Inc., expected to boost their active lifestyle segment from fall 2025. G-III Apparel's financial position remains robust, marked by a significant inventory decrease and a debt-free balance sheet.
These developments are complemented by the company's raised outlook for the latter half of the year. Full-year earnings per diluted share guidance is reaffirmed at $3.95 to $4.05. For Q3, G-III Apparel expects net sales of around $1.1 billion and non-GAAP net income per diluted share between $2.20 and $2.30.
Despite facing sales challenges with Vilebrequin and anticipating higher freight costs in Q3, the company remains optimistic. It continues to focus on its licensed business and sees long-term global expansion opportunities. G-III Apparel's partnerships with AWWG and Red Bull are aiding in the distribution of the Pepe brand, showcasing the company's strategic approach to growth.
InvestingPro Insights
InvestingPro data indicates a market capitalization of $1.44 billion for G-III Apparel Group Ltd. (NASDAQ:GIII), with a P/E ratio that stands at a modest 7.73. This valuation is supported by a P/E ratio for the last twelve months as of Q2 2025 at 7.49, suggesting a consistent earnings outlook. The company's strong free cash flow yield is reflected in its price to book ratio of 0.95 and a PEG ratio of 0.04 for the same period, highlighting a potentially attractive investment opportunity when considering growth.
Recent performance metrics from InvestingPro reveal a significant return over the last week, with a 15.41% increase, and an even more impressive return over the last month at 24.8%. This suggests a positive short-term momentum for the stock, aligning with the KeyBanc analyst's optimistic view.
Moreover, G-III Apparel has demonstrated a robust return of 58.29% over the past year. Two InvestingPro Tips for G-III Apparel include the fact that analysts have revised their earnings downwards for the upcoming period, which investors should consider, and that the stock is trading at a low earnings multiple, which may indicate it is undervalued relative to its earnings potential. For those looking for more insights, there are 11 additional InvestingPro Tips available, providing a comprehensive analysis of G-III Apparel's financial health and stock performance.
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