GOOS Gets Downgraded as Earnings Near

Canada Goose earnings are due out next week

by Josh Selway

Published on Nov 7, 2019 at 9:50 AM

Yesterday the shares of clothing concern Canada Goose Inc (NYSE:GOOS) were swiftly rejected by the 200-day moving average, one of the most closely watched technical trendlines. This resistance was also near the $44 region, which capped GOOS' upside during its breakout attempt on Oct. 1, too. While this technical setup is troubling enough for investors, the stock was just downgraded at D.A. Davidson, and earnings are due out next week, something that's severely worked against the shares in recent quarters.

But starting with this bearish analyst attention, D.A. Davidson cut its view on the security to "neutral" from "buy," and dropped its price target $6 to $42. The brokerage firm's note called out a potential slowdown in orders from department stores and wholesale sellers, along with headlines related to a decline in Chinese tourism in the U.S., along with the protests in Hong Kong -- all of which could weigh on Canada Goose sales. The security last seen down 5.1% today at $75.02.

Sentiment, more broadly, is mixed. A slim majority of analysts have "strong buy" ratings on the shares, but short interest remains high, accounting for 20% of the equity's float. Going by average daily trading volumes, it would take short sellers more than two weeks to cover, though short interest fell by 7.8% in the last two reporting periods.

With Canada Goose set to report earnings before the open next Wednesday, Nov. 13, the advantage would certainly be given to the bears, judging by how the share have performed in recent quarters after the company's reports. In the last three quarters, GOOS has fallen 7.5%, 30.9%, and 12.9% the day after earnings.

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