Is Aritzia stock a buy? (October, 2024)

TD Cowen analyst Brian Morrison is becoming more bullish on Aritzia (Aritzia Stock Quote, Chart, News, Analysts, Financials TSX:ATZ).

In a research report October 3, the analyst reiterated his “Buy” rating on the stock and raised his price target from $50.00 to $60.00.

As reported by The Globe and Mail, Morrison, in a research update issued October 3, said evidence is building of a turnaround.

“Our channel checks indicate the ‘turnaround’ plan of Artizia appears to remain on track,” the analyst wrote. “We highlight Q2 is a seasonally soft period as we transition out of summer toward the all-important holiday season. While typically a period inclusive of promotional activity, this action should be significantly reduced from Q2/F24 due to the year-over-tear streamlining of its inventory position. In aggregate, product resonation, new store openings, digital investment, and its ongoing focus on cost control should drive attractive year-over-year EPS growth. Our adjusted EPS forecast of $0.15 is in line with consensus.”

Morrison says Aritzia could become a very shareholder friendly stock, going forward.

“Should Aritzia maintain an attractive growth outlook through 2026, this should be accompanied by strong FCF generation,” he added. “This should accelerate in F2026 with the forthcoming completion of an expansion to its Vancouver DC [distribution centre]. With net cash ($100-million) on its balance sheet and major capital projects nearing completion, we believe an active NCIB may become a priority. With a long runway for store/eCommerce penetration in the U.S. market fostering growth, we would view an active NCIB as an appropriate allocation of capital.”