Key Highlights

● Raymond James upgraded Capri, citing a low bar and a price-to-earnings ratio of about six.

● Reports differed on the new rating, describing both Outperform and Strong Buy.

● Raymond James also upgraded Greif and Brinker International the same day.

● Capri rose even as consumer sentiment fell to its lowest since October 2011.

An upgrade on low expectations

Capri Holdings (NYSE:CPRI) rose on Friday after Raymond James upgraded the stock, with market data showing the shares higher by mid-morning. The firm cited a low bar for the company, pointing to a price-to-earnings ratio of about six times.

Reports differed on the new rating. One market review described it as Outperform in one section and Strong Buy in another, while other market reports indicated an upgrade to Strong Buy from Outperform with a $20 price target.

A price-to-earnings multiple of about six is low compared with the broader market, which is the heart of the "low bar" argument. When expectations are modest, even small improvements in results can move a stock.

Capri is a global fashion group whose brands include Michael Kors and Jimmy Choo. It sells handbags, footwear, apparel and accessories through its own stores, online and through department stores and other wholesale partners. Luxury and accessible-luxury brands depend on discretionary spending, which makes their shares sensitive to shifts in consumer confidence. That sensitivity was on display across the sector on Friday.

Raymond James' busy day

The Capri upgrade was one of several calls from Raymond James on Friday. The firm also upgraded Greif (NYSE:GEF) to Outperform from Market Perform with a $90 target, citing expected margin expansion, and those shares rose too, market data showed. It upgraded Brinker International (NYSE:EAT), the owner of Chili's, to Strong Buy.

Other consumer calls were mixed. Williams Trading downgraded Birkenstock (NYSE:BIRK) to Sell from Hold, saying it views the company's fiscal 2028 targets as unlikely. Needham initiated coverage of Victoria's Secret (NYSE:VSCO), Urban Outfitters (NASDAQ:URBN) and Boot Barn (NYSE:BOOT) at Buy, and Gap (NYSE:GAP) and Kontoor (NYSE:KTB) at Hold.

Gains against a weak consumer backdrop

Capri's rise stood out on a day when consumer stocks broadly struggled. The LSEG/Ipsos Primary Consumer Sentiment Index fell 5.3 points to 45.2, its lowest since October 2011, according to market reports. Apparel maker Oxford Industries (NYSE:OXM) fell, as did housing, media and leisure names. The consumer discretionary sector was lower in the final hour, per market data.

The broader market also declined. There is no reported closing level for the NYSE Composite on Friday. The S&P 500 fell 84.62 points to 7,659.44, while the Nasdaq Composite dropped 572.99 points to 26,140.03, capping its worst week since June. The Dow Jones Industrial Average slipped 175.28 points to 52,002.41.

Chip and software stocks led the decline as investors questioned how the AI build-out will be financed. Energy, utilities and consumer staples rose, and six of 11 S&P 500 sectors finished higher.

Rates remain a factor for retailers, since higher borrowing costs can squeeze household budgets and raise the cost of carrying inventory. The 10-year Treasury yield eased to roughly 5.1, according to market data, after reaching its highest level since 2002 earlier in October.

Capri Tests Raymond James' Low Bar

For Capri, the next test is its upcoming quarterly report, which will show whether results can clear the low bar that Raymond James described. Investors will also watch for trends in demand for handbags and accessories heading into the holiday season.

The University of Michigan consumer sentiment survey is due on Oct 23, and the Federal Reserve's decision on Oct 28 will also shape the outlook for discretionary spending. Footwear and apparel peer Deckers Outdoor (NYSE:DECK) reports after the close on Oct 22.