What Happened?
Shares of fashion conglomerate G-III (NASDAQ: GIII) jumped 3.3% in the afternoon session after investors reacted to a positive analyst note following the company's mixed second-quarter earnings report. The apparel company's stock initially fell after it lowered its full-year guidance, citing macroeconomic challenges and the expected impact from tariffs.
However, the second-quarter results surpassed expectations for both net sales and earnings. Following the report, analysts at KeyBanc raised their price target on the shares to $33 from $30, while maintaining an Overweight rating. KeyBanc cited confidence in G-III's brand potential and its ability to execute amid uncertainty, providing a more optimistic view that appears to be driving the stock's rebound.
After the initial pop the shares cooled down to $26.91, up 3.7% from previous close.
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What Is The Market Telling Us
G-III’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 5.8% on the news that a surprisingly weak August jobs report fueled concerns of a cooling economy but also raised expectations for Federal Reserve interest rate cuts.
The U.S. economy added a mere 22,000 jobs last month, a significant miss from the 75,000 analysts had projected, according to the Bureau of Labor Statistics. This figure represents a notable slowdown in the labor market. While such a sharp decline in job growth can be a bearish signal for the economy, investors are now betting it will force the Federal Reserve's hand. As noted by one economist, the market's initial reaction seems to be more focused on the increased likelihood of Fed rate cuts rather than the immediate concerns about economic cooling, with a September cut now seen as fully priced in.
G-III is down 16% since the beginning of the year, and at $26.91 per share, it is trading 25.5% below its 52-week high of $36.10 from December 2024. Investors who bought $1,000 worth of G-III’s shares 5 years ago would now be looking at an investment worth $2,211.
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