Wells Fargo double downgrades Canada Goose due to impact of El Nino
Wells Fargo cited macroeconomic headwinds for Canada Goose including El Niño weather patterns, challenges in Europe, the Middle East and Africa, and tariffs / Photo: Facebook / canadagoose
On Monday, Wells Fargo downgraded small-cap parka maker Canada Goose by two notches to "underweight." Expectations of a warmer winter will weigh on the company’s sales, Wells Fargo argues. Canada Goose shares fell more than 5% following the downgrade, hitting their lowest level in more than a year.
Details
Wells Fargo has downgraded Canada Goose from “overweight” to “underweight,” CNBC reported. It also cut its target price by around 40% to $10 per share, implying around 21% upside from Monday’s close. Canada Goose shares lost more than 5% to end the session at $8.30 apiece. That was their worst close since late April 2025. In premarket trading on Tuesday, the stock had bounced back more than 3% as of this writing.
Rationale for downgrade
Investors have not paid much attention to El Niño, argues Wells Fargo. The natural phenomenon occurs every two to seven years, caused by unusually warm waters in the equatorial Pacific Ocean, which can bring more rainfall to some areas and drought to others. In 2026, forecasters expect a super El Niño that could be the strongest ever recorded, Reuters reports.
A warmer winter will weigh on Canada Goose sales, Wells Fargo cautions. In the third quarter of the last fiscal year, ended December 28, the company’s comparable sales rose just over 6% year over year. Wells Fargo believes that weather will push the winter apparel maker’s comparable sales down 5% year over year in the current third fiscal quarter, versus its previous forecast for 1% growth. As a result, Wells Fargo expects Canada Goose’s total sales to rise 1.9%, versus consensus expectations for 4.4% growth. In the third quarter of the last fiscal year, the top line came in 14.2% higher at CAD694.5 million ($501.26 million at the current exchange rate).
What other analysts say
Canada Goose shares are down around 37% year to date. Wall Street is broadly cautious on the name: it has five “sell” recommendations, five “hold” ratings, and just three “buy” calls. The average target price is $9.70 per share, implying around 17% upside from the last close.
