By Sabrina Escobar

There's a maverick on Wall Street.

Wells Fargo analyst Ike Boruchow has slashed his 2026 earnings estimates, bucking the trend of holding fast to financial forecasts because of all the uncertainty about tariffs and the economy.

Boruchow lowered his numbers for the companies he covers as much as 25% below Wall Street's consensus estimates.

"We are officially doing what the Street has seemingly been hesitant to do, embedding the current macro setup into our models as we move away from consensus and attempt to add greater value," Boruchow wrote.

Many analysts are waiting for things to shake out on trade and economic growth before firming up their forecasts. Many economists think tariffs -- the White House has imposed 145% tariff on Chinese goods as well as a 10% baseline rate on all imports -- could drag the country into a recession.

Boruchow believes tariffs -- no matter how big -- probably will increase operating costs for retailers, disrupt supply chains, reignite inflation, and dampen consumer sentiment.

"We expect this will in turn create significant headwinds to demand within our consumer discretionary space as we potentially move into a recession -- pressuring our spaces top-line, and factored into our estimate revisions," he wrote.

If there is an economic downturn, retail stocks, in particular, face "materially larger downside risk," he wrote.

In the past four down cycles, valuation multiples have compressed by about 46%, Boruchow estimated.

But even in this tough-to-navigate economy, there will be winners and losers in the retail space. The analyst downgraded four stocks and upgraded three to reflect his new view on stock performance in the coming months.

Boruchow upgraded Levi-Strauss to Overweight from Equal Weight because of its low exposure to Chinese imports. Also on the list of winners: Kontoor Brands, Ralph Lauren, Tapestry, and resalers ThredUp and The RealReal. These companies, he wrote, have low sourcing from China, high margins and pricing power, and strong brand momentum.

Boruchow also increased his rating for Canada Goose and V.F. Corp. to Equal Weight from Underweight.

Companies that could find themselves on the losing end have more exposure to China, lower margins, less pricing power, weak brand momentum, and skew even more discretionary, he wrote.

Boruchow downgraded Nike and Gap to Equal Weight from Overweight, largely because they have high exposure to tariffs and are still in challenging turnarounds.

And Boruchow downgraded Capri Holdings and Victoria's Secret to Underweight from Equal Weight. Both companies, he noted, are in a "difficult place fundamentally," which makes them more susceptible to macro changes.

Other companies in a tight spot include Signet Jewelers, Hanes Brands, and V.F.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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April 30, 2025 12:02 ET (16:02 GMT)

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