Our DCF-based price target for ANF of $105 is based on a 14% discount rate and a 4.0x terminal multiple on year 5 EBITDA. Our target price implies an F25E EV/EBITDA multiple of ~5.8x.

Risks to achieving our target price include: (1) comps deteriorate relative to our estimates; (2) competitive promotional pressures cause ANF to increase promotions resulting in greater margin pressure; (3) new merchandise does/does not resonate with customers at A&F and/or Hollister; (4) international stores productivity and profitability deteriorate at a rate faster than we anticipate; and (5) cotton or other input costs rise significantly; (6) comp trends could perform better than we expect; (7) tariff pressure could not be as significant as we are expecting .


If the impact on the company from any of these factors proves to be greater/less than we anticipate, the stock could have difficulty achieving/exceed our target price.