BMO Capital maintained its Outperform rating on Aritzia (ATZ:CN) (OTC: OTC:ATZAF), with a steady price target of Cdn$57.00. The firm's analysis of web traffic in September 2024 showed a mixed performance, aligning with Aritzia's recent quarterly report. Although overall web traffic decreased by 13% compared to the previous month, the U.S. market exhibited a positive trend with a 5% increase, in contrast to the Canadian market, which experienced a 25% year-over-year decline.
The stock's decline of approximately 10% since the second quarter was attributed to weaker-than-anticipated guidance for the third quarter of fiscal year 2025, which is now believed to be factored into the stock's current valuation. Despite the recent dip, BMO Capital sees an attractive risk-reward balance for the company's shares.
BMO Capital's stance is buoyed by Aritzia's ongoing expansion in the U.S. market. The firm's commentary reflects confidence in the company's strategy and potential for growth, particularly in the United States, despite the recent softening in the Canadian sector.
The analyst pointed out that the U.S. growth has persisted into the third quarter, while the Canadian market has shown signs of weakening. This observation supports Aritzia's management's statements from last week regarding the company's performance in the respective markets.
BMO Capital suggests that Aritzia is in a strong position to capitalize on significant growth opportunities in the U.S. The firm's continued endorsement of the Outperform rating indicates a positive outlook for the company's operational execution and market strategy.
Aritzia Inc reported robust results for the second quarter of fiscal 2025, with a 15% rise in net revenue to $616 million. The company's U.S. sales surged by 24%, fueled by real estate expansion and e-commerce growth, while Canadian sales grew by 6% due to a calendar shift. The company's gross profit also saw a substantial rise of 33% to $247 million.
These recent developments have led Aritzia to revise its full-year revenue outlook to $2.54 billion to $2.6 billion. The firm also projects Q3 net revenue to fall between $675 million and $700 million. Amidst these developments, Aritzia plans to continue its expansion by opening 12 to 13 new boutiques and repositioning 3 to 4 boutiques.
InvestingPro Insights
Recent InvestingPro data provides additional context to BMO Capital's analysis of Aritzia (OTC: ATZAF). The company's market cap stands at $3.74 billion, with a P/E ratio of 50.18, indicating that investors are pricing in expectations of future growth. This aligns with BMO Capital's optimistic outlook on Aritzia's U.S. expansion prospects.
InvestingPro Tips highlight that Aritzia's net income is expected to grow this year, supporting the Outperform rating. The company's revenue growth of 8.44% over the last twelve months and a quarterly growth of 15.25% in Q2 2025 underscore its expansion trajectory, particularly in the U.S. market as noted by BMO Capital.
However, investors should be aware that Aritzia's stock has experienced significant volatility, with a 10.59% decline in the past week, which correlates with the 10% drop mentioned in the article following the Q2 report. Despite this recent setback, the stock has shown a strong 82.26% return over the past year, reflecting overall market confidence in Aritzia's growth strategy.
For readers seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Aritzia, providing a deeper dive into the company's financial health and market position.
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