LIVE MARKETS-UBS: Bullish on softlines

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

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)

EARLIER ON LIVE MARKETS:

SHOULD YOU BUY THE BIGGEST LOSERS AFTER TAX HARVESTING? CLICK HERE

VISIONS OF SUGARPLUMS: GDP, CONSUMER CONFIDENCE, DURABLE GOODS, INDUSTRIAL OUTPUT CLICK HERE

US STOCKS LITTLE CHANGED AFTER DATA, BUT S&P 500 STILL EYES ITS HIGHS CLICK HERE

TRIPLE TAILWINDS PUT EM ON THE FAST TRACK TO 2026 GAINS CLICK HERE

PLUNGING GOLD/SILVER RATIO HAS PRECIOUS METALS MINERS GOING PARABOLIC CLICK HERE

JAPAN'S RATE PATH HINGES ON YEN MOVES CLICK HERE

EVEN CRYPTO ACTIVITY IS SLOWING AS THE YEAR ENDS CLICK HERE

STOXX SETS NEW PEAK AS 2025 WRAPS UP CLICK HERE

BEFORE THE BELL: EUROPE STEADY, CHRISTMAS CHEER FOR NOVO CLICK HERE