Abercrombie & Fitch Cut To Neutral; Price Target Almost Halved

Abercrombie & Fitch Co. was downgraded to neutral from outperform at Credit Suisse on Friday. Competitive pressures look to be heating up in the teen apparel sector, analyst Christian Buss said, adding declining mall traffic also is another negative. The rise of low-priced chains including H&M and Forever 21 will make it hard for specialty chains including Abercrombie that don't have "the scale, speed of operations or value perception with consumers to deliver sustained earnings momentum," he said. Abercrombie will have more limited room to expand its margin than he previously anticipated, Buss said. He slashed the price target on the stock to $28 from $53 a share. Abercrombie dropped 1.5% to $28.47 in premarket trading. Its stock has dropped 12% this year