Gildan Activewear Inc., the top-performing company in the benchmark Standard & Poor’s/TSX Composite Index in 2012, fell the most in more than two months after an analyst at RBC Capital Markets lowered the stock’s rating.

Gildan, one of the world’s biggest suppliers of blank tops to makers of printed clothing, fell 3.1 percent to C$36.72, the most since Nov. 14.

Tal Woolley, consumer analyst with RBC in Toronto, lowered his rating for Montreal-based Gildan to sector perform, or hold, from outperform, the equivalent of a buy, while maintaining a price target of $39. The company now trades more expensively than its peers based on his 2014 earnings forecast of $3 a share, he said.

“Strong price appreciation is the primary reason for our downgrade,” Woolley said in a note to clients today.

Gildan jumped 90 percent in 2012, tops among all stocks in the benchmark Canadian equity gauge. It’s current price-to-earnings ratio of 29.53 is higher than some of its competitors including Hanesbrands Inc. at 19.34 and Oxford Industries Inc. at 19.28, according to data compiled by Bloomberg.

Woolley expects “very strong year-over-year” earnings results for Gildan’s upcoming first quarter, including a 32 percent rise in sales to $400 million versus consensus of $397 million, driven by gains in the printwear and branded apparel product lines of 46 percent and 18 percent respectively.

Lower Costs

Gross margin is estimated to rise 2,545 basis points to 27.5 percent, driven by “lower cotton costs and no inventory devaluation,” Woolley said.

“We would revisit our rating if shares pulled back materially, given our belief in the size of the growth opportunity and management capability to exploit it, or we saw upside to our 2014 earnings-per-share forecast,” he said.

Jennifer Dowty, a fund manager with Manulife Asset Management Ltd., said the outlook for Gildan remains very positive.

“The pullback today is an opportunity to accumulate shares,” she said in a phone interview. Dowty’s firm manages about C$235 billion ($235.57 billion).

Of note, Gildan will spend at least $3.8 million for a 30-second TV spot during the Super Bowl on Feb. 3, according to an interview the company’s ad agency gave to the New York Times.

“This is consistent with Gildan’s guidance that it would be materially increasing its marketing outreach this year,” Woolley said.

Gildan is scheduled to report its earnings on Feb. 6.

A call to the company seeking comment was not immediately returned.

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