CPRI Stock Forecast & Price Target

Capri Holdings is positioned for significant revenue growth, with the retail channel anticipated to provide a $900 million incremental opportunity and licensed product sales expected to exceed $2 billion, enhancing the company’s accessory-focused portfolio. The gross margin is projected to expand due to cost reduction initiatives and improved pricing strategies, contributing to anticipated operating leverage as the Michael Kors brand is expected to return to growth by FY27. Additionally, the successful execution of a software cloud transition, evidenced by a 57% year-over-year increase in subscription billings, underscores the company's capacity to leverage its brand to attract a wider client base and boost productivity across various segments.

Capri Holdings is experiencing a decline in its brand sales, particularly in the Americas, which are projected to decrease from 68% in FY25 to 60% in the long term, despite a predicted recovery by FY27. The company's stock price has diverged significantly from its intrinsic value, primarily due to deteriorating performance of its flagship brand, Michael Kors, and ongoing geopolitical uncertainties, especially related to the Chinese market. Risks to financial performance include the potential failure to revitalize the Michael Kors brand, continued soft demand for luxury goods, and a significant equity value premium that could pose further risks to the stock price.