On Wednesday, CFRA began coverage on Puma (PUM:GR) (OTC: PMMAF (OTC:PMMAF)) with a Hold rating and established a 12-month price target of EUR49. The firm's analyst cited the sportswear company's strong global brand recognition, fueled by successful partnerships with athletes and cultural influencers, as a key factor in the Hold rating. The price target is based on a 2024 Price-to-Earnings (P/E) ratio of 22.8 times, which is consistent with Puma's three-year average forward P/E of 23.1 times.
Puma's commitment to sustainability was also highlighted as a potential advantage, as it may enhance customer loyalty given the increasing demand for environmentally responsible brands. The analyst noted that Puma appears to be on course to achieve its 2024 financial targets, which include mid-single-digit currency-adjusted revenue growth and Earnings Before Interest and Taxes (EBIT) between EUR620 million and EUR670 million. This outlook is supported by a strong wholesale order book.
However, the report acknowledged challenges facing Puma, such as economic headwinds and subdued consumer sentiment, especially in China, which could impact short-term revenue. The competitive landscape, with major players like Nike (NYSE:NKE) and Adidas (OTC:ADDYY), was also recognized as a factor that could influence Puma's market performance.
CFRA forecasts Puma's Earnings Per Share (EPS) to be EUR2.15 for the year 2024 and to increase to EUR2.80 by 2025. This projection takes into account the company's growth trajectory and operational targets, while also considering the potential hurdles it may face in the near future.
InvestingPro Insights
To complement CFRA's analysis, InvestingPro data provides additional context for Puma's financial position. The company's market capitalization stands at $7 billion, with a P/E ratio of 25.74, slightly higher than the 22.8 times 2024 P/E ratio used in CFRA's price target calculation. This suggests that the market may be pricing in some of the growth potential highlighted in the analyst's report.
InvestingPro Tips reveal that Puma has raised its dividend for 3 consecutive years, which aligns with the company's stable financial performance mentioned in the article. Additionally, Puma's strong return over the last three months, as noted by InvestingPro, supports the positive outlook on the company's ability to meet its 2024 financial targets.
The revenue for the last twelve months as of Q3 2023 was $9.48 billion, with a slight decline of 3.47% year-over-year. This data point reflects the economic headwinds and subdued consumer sentiment mentioned in the CFRA report, particularly in markets like China. However, Puma's gross profit margin of 47.31% for the same period indicates a strong ability to maintain profitability despite these challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into Puma's financial health and market position. There are 5 more InvestingPro Tips available for Puma, which could be valuable for those looking to make informed investment decisions in the competitive sportswear industry.
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