01:37 PM EDT, 05/30/2024 (MT Newswires) -- Abercrombie & Fitch's ( ANF ) Q1 results and a boost in guidance for full-year revenue indicated a higher profitability ceiling than forecast, Morgan Stanley said Thursday in a report.

Results showed signs of the company's "banner playbook transferability elsewhere," indicating "incrementally positive" sentiment, Morgan Stanely said.

The company reported fiscal Q1 adjusted earnings Wednesday of $2.14 per diluted share on net sales of $1.02 billion. Analysts polled by Capital IQ expected EPS of $1.72 on revenue of $965 million. For the fiscal year, the company expects net sales growth of 10%, up from 4% to 6%.

The "substantial" EPS beat was driven by "stronger-than expected sales momentum" and gross-margin expansion on lower cotton costs and reduced discounting, the report said. The Q1 results probably will outperforms peers this quarter, Morgan Stanley said.

Morgan Stanley raised its price target on Abercrombie & Fitch's ( ANF ) stock to $172 from $112 and maintained an equalweight rating.

Shares of the company slumped 5.8% in recent Thursday trading.

Price: 178.39, Change: -11.06, Percent Change: -5.84