Telsey analysts reduced their price target for The Children’s Place (NASDAQ:PLCE) to $9 from $13 while maintaining their Market Perform rating on the stock. Telsey noted that while the reported revenue met expectations, the better-than-expected margins were overshadowed by a significant tax drag, leading to a notable earnings miss.

The Children’s Place secured additional financing and reduced its debt by over $100 million since the third quarter. However, due to the lack of fiscal 2024 guidance and the weaker-than-expected fourth-quarter results, Telsey anticipates potential short-term challenges ahead.

Although the company’s improved balance sheet should mitigate immediate liquidity issues, Telsey sees it challenging to predict when growth and profitability will improve, which justifies maintaining the Market Perform rating. The price target reduction reflects a 4.9x multiple on the analyst’s two-year forward EBITDA estimate of $77 million, slightly below the three-year historical average of 6.8x, to account for the continued earnings pressure.

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