Children's Place Is On A 'Slippery Slope,' Says Bearish Analyst: 'There's Little Margin For Error'
Portfolio Pulse from Priya Nigam
Children's Place Inc (NASDAQ:PLCE) shares dropped significantly in premarket trading after B Riley Securities downgraded the stock from Neutral to Sell and reduced the price target from $19 to $4. Analyst Jeff Lick highlighted the company's need for $50 million to $75 million in funding to maintain proper inventory and resource levels, warning that any new funding could be extremely dilutive to current equity. Lick also pointed out the risks of operating losses, especially in the company's seasonally weakest quarter, and a potential reinforcing cycle of distress.
February 13, 2024 | 7:27 pm
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Children's Place Inc (NASDAQ:PLCE) faces a downgrade from Neutral to Sell by B Riley Securities, with a significant price target cut from $19 to $4, due to funding needs and potential equity dilution.
The downgrade and price target cut by B Riley Securities are based on the need for substantial funding to maintain operations and the potential for this funding to be highly dilutive to current shareholders. The analyst's concerns about the company's ability to cover inventory needs without incurring significant operating losses, especially in its weakest quarter, and the mention of a reinforcing cycle of distress, suggest a negative outlook for PLCE's short-term stock performance.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100