On Thursday, Morgan Stanley maintained its Equalweight rating on Birkenstock Holding plc (NYSE: NYSE:BIRK), with a steady price target of $58.00. The firm's analysis followed Birkenstock's third-quarter earnings report, which is the company's most significant quarter financially.
Birkenstock's sales reached €565 million, marking a 19% constant exchange rate (CER) growth, albeit slightly below the consensus estimate of €568 million and 19.9% CER increase. The company's adjusted EBITDA was reported at €186 million, just shy of the consensus estimate of €187 million.
The marginal earnings miss was attributed primarily to performance in the Americas, which accounts for half of Birkenstock's sales. Growth in this region was 15% CER, falling short of the anticipated 17.6% CER. Conversely, the European and Asia-Pacific markets exceeded expectations. Despite the slight discrepancy, Birkenstock's management has confirmed its full-year guidance.
However, current consensus estimates are marginally higher, which might lead to low single-digit downgrades for the full-year 2024 forecasts, pending insights from the upcoming conference call regarding potential conservatism in the guidance.
Birkenstock's quarterly report highlighted a robust and increasing demand across all segments, channels, and categories. The company emphasized particular success with closed-toe shoe styles, which saw growth more than double the overall brand average and experienced a 4% year-over-year increase in market penetration.
The stock closed on Wednesday at $60, which puts Birkenstock's 2024 estimated price-to-earnings (P/E) ratio at 38 times. This valuation is significantly higher than most companies in the footwear, sportswear, lifestyle, and luxury goods sectors. The exception is the brand ON, which trades at a P/E ratio of 58 times.
In other recent news, Birkenstock Holding plc has been the subject of several significant financial developments. The footwear company recently released 14 million shares in a secondary offering, maintaining existing shareholders' equity. Birkenstock continues to project sales growth of over 20% and an EBITDA range of €535 to €545 million for fiscal year 2024. Analysts from various firms have adjusted their ratings and price targets for Birkenstock.
Jefferies and Citi maintained a 'Buy' rating with a steady price target of $75.00 and $65.00 respectively, while Goldman Sachs adjusted its price target to $59.50, maintaining a neutral stance. Deutsche Bank resumed coverage with a 'Buy' rating and a price target of $70.00, and UBS upgraded Birkenstock from 'Neutral' to 'Buy', increasing the price target to $85.00.
InvestingPro Insights
Following the recent earnings report of Birkenstock Holding plc, a deeper dive into the company's financial health and market performance using InvestingPro data reveals additional insights. Birkenstock's market capitalization stands at a substantial $11.4 billion, reflecting its significant presence in the market. With a high P/E ratio of 104.36, the company is trading at a premium, suggesting investor confidence in its growth prospects. This optimism is supported by the company's impressive gross profit margin of 60.85% over the last twelve months as of Q2 2024, indicating strong operational efficiency and product appeal.
InvestingPro Tips highlight that Birkenstock is expected to see net income growth this year, and with 6 analysts having revised their earnings upwards for the upcoming period, the company's financial outlook appears positive. Additionally, Birkenstock's liquid assets exceed its short-term obligations, providing financial stability and the ability to manage short-term liabilities effectively. For investors seeking detailed analysis and further tips, InvestingPro offers an additional 14 tips on Birkenstock at https://www.investing.com/pro/BIRK.
These metrics and insights underscore the reasons behind Morgan Stanley's Equalweight rating and may explain the stock's robust performance, with a notable 51.0% return over the last year. As Birkenstock continues to navigate the competitive footwear market, these financial indicators will be key for investors monitoring the company's trajectory.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.