Main US indexes modestly green
Comm Svcs leads S&P sector gainers; Real Estate weakest group
Dollar down; bitcoin off ~1%; crude slightly positive, gold rises ~0.6%
US 10-year Treasury yield flat ~4.17%
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UBS: BULLISH ON SOFTLINES
UBS analysts led by Jay Sole write that they are more bullish on softline stocks than a month ago as December survey data showed that "US consumers are feeling good over all" and better month-over-month.
The analyst group envisions a "satisfactory Holiday season finish and good 2026 start" and expects that few companies in the sector would miss consensus expectations for fourth quarter (4Q) EPS.
"This, plus the prospect of US fiscal stimulus starting to drive Softline industry sales growth rate acceleration early in 2026, likely keeps Softline stock momentum going at least through January," they write.
Part of their calculation is that positive factors are not fully priced into shares yet.
"Our conversations with investors suggest they are already excited about US fiscal stimulus, but aren't as sure the underlying US consumer spending environment will remain buoyant post-Christmas," they said.
Even though the softlines' stock P/E is 10% above its 10-year average, the analysts still see 24% potential upside due to the prospects for further P/E expansion.
The group has buy ratings on stocks including On Holding ONON.K, Ralph Lauren RL.N, Gildan Activewear GIL.TO, Levi Strauss LEVI.N, Amer Sports AS.N, Birkenstock BIRK.N, TJX Co TJX.N, Burlington BURL.N, Deckers Outdoor DECK.N, Signet Jewelers SIG.N, Aritzia ATZ.TO, PVH Corp PVH.N, Victoria's Secret VSCO.N, and American Eagle Outfitters AEO.N.
They favor those stocks over neutral-rated Nike NKE.N and sell-rated Macy's M.N, Kohl's KSS.N, and Dillard's DDS.N. Dillard's shares were up 2.5% on Tuesday after selling off sharply on Monday, when it ultimately closed down 7.7%. Macy's and Kohl's were eyeing their second straight day of declines.
(Sinéad Carew)
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