On Monday, UBS reiterated a Neutral rating on Oxford Industries (NYSE:OXM) with a steady price target of $104.00. The firm anticipates a weaker-than-expected performance for the company's first quarter of 2024, projecting an earnings per share (EPS) shortfall of 8 cents below expectations.
Oxford Industries is also expected to revise its full-year earnings outlook, potentially reducing its forecast by 20 to 30 cents from the current projection of $9.30 to $9.70 for the fiscal year 2024.
The anticipated adjustment follows a perceived slowdown in sales during the first quarter, which is believed to have continued into the second quarter. UBS predicts these developments may lead to slight downward adjustments in the sell-side's average EPS forecast of $9.49. Despite these expectations, UBS suggests that the market has already factored in a subdued first-quarter report, and therefore, the company's upcoming financial disclosures are unlikely to significantly impact investor sentiment towards Oxford Industries.
Looking at market activity, the options market has priced in an approximate 6.8% fluctuation in Oxford Industries' share price around the earnings report, which is slightly higher than the historical average movement of 6.4%. However, UBS forecasts that the actual volatility around the report's release may be less than the +/-6.8% expected by the options market.
The firm's analysis indicates that while a first-quarter earnings miss is anticipated, it is not expected to cause a major shift in the market's view of Oxford Industries. The company's stock performance and investor outlook appear to be in line with market expectations ahead of the official earnings release.
In other recent news, Oxford Industries, known for its strong fashion brands, posted robust annual earnings for fiscal 2023, marking its second-strongest earnings to date. Despite achieving sales of $1.571 billion, which was at the lower end of expectations, the company demonstrated resilience with a cash flow from operations of $244 million.
However, it acknowledged a soft start to the year due to cautious consumer spending, which affected the fashion apparel sector. Looking ahead to fiscal 2024, Oxford Industries anticipates mid-single-digit revenue growth but also expects increased pressure on selling, general, and administrative expenses due to inflation and ongoing investments.
Additionally, Telsey Advisory Group adjusted its outlook on Oxford Industries, increasing the price target to $110 from the previous $102, while maintaining a Market Perform rating on the stock. This adjustment comes in response to a mixed financial performance and market challenges faced by the company. Despite these challenges, management's expectations for fiscal year 2024 suggest a more positive outlook later in the year. The new price target of $110 is based on a 10.4x multiple applied to Telsey's two-year forward EPS estimate of $10.61 for Oxford Industries.
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