Abercrombie & Fitch's 2015 Outlook 'Worse Than Feared,' Morgan Stanley Lowers PT

In a report published Wednesday, Morgan Stanley analyst Kimberly Greenberger commented that Abercrombie & Fitch Co.'s (NYSE: ANF) fiscal 2015 outlook was "worse than feared," despite a lack of guidance.

Greenberger noted that Abercrombie & Fitch's management withheld issuing fiscal 2015 sales or earnings per share guidance, but two pieces of line item guidance are considered negatives. The first item being flat SG&A dollars (versus expectations of a $65 million year over year drop), the second being a mid-40's tax rate (versus an expected 39 percent rate).

Looking at the International segment, Greenberger noted that EBIT margins have declined 750 basis points cumulatively over the past two years and 1,360 basis points over the past three years, yet are still 1,000 basis points higher than the U.S. The analyst continued that this trends suggests "significant further downside," even if foreign exchange headwinds normalize.

Shares remain Underweight rated with a price target lowered to $14 from a previous $18.