Piper Sandler has reiterated its Overweight rating on Wolverine World Wide (NYSE: NYSE:WWW) with a consistent price target of $18.00. The firm's confidence in the company is buoyed by strong brand performances and upcoming product releases.
The analyst highlighted that Wolverine World Wide's brand Saucony is currently in high demand, evidenced by the significant consumer interest in recent collaborations. The Minted partnership saw lines lasting 48 hours, and the upcoming Jae Tips "To Do List" collection is expected to be released later this month.
Additionally, Wolverine World Wide is set to expand its distribution network, with JD (NASDAQ:JD) Sports slated to begin carrying its products this fall. This strategic move is anticipated to further bolster the company's sales.
The analyst also pointed out that Merrell, another brand under the Wolverine World Wide umbrella, is one of only four brands gaining market share in the trail running category.
These positive developments have led Piper Sandler to forecast a sales inflection starting in the fourth quarter of 2024. The firm's valuation of Wolverine World Wide is based on a 12 times price-to-earnings (P/E) ratio and a 9 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) on their 2025 estimates.
In other recent news, Wolverine World Wide has been making significant strides in its financial performance. The company's Q2 results surpassed expectations, with revenue exceeding consensus estimates by 4%, and adjusted EBITDA/EPS exceeding by over 100% and 300% respectively, for the past three quarters.
This strong performance has prompted Telsey Advisory Group and KeyBanc to reassess their targets for the company. Telsey Advisory Group raised its price target to $15.00, while KeyBanc upgraded the company's stock from Sector Weight to Overweight, setting a new target at $20.00.
Piper Sandler has also expressed confidence in Wolverine's strategic repositioning efforts, including divestitures and changes to its business model, predicting a cleaner financial model by 2025. The firm anticipates Wolverine's sales to stabilize and the company to demonstrate medium single-digit sales growth, EBIT margin recapture, and free cash flow deployment towards debt repayment and share repurchases.
Despite challenges such as supply chain disruptions and anticipated revenue decline for fiscal year 2024, Wolverine remains committed to strengthening its balance sheet and improving inventory levels. The company's recent developments demonstrate its resilience and adaptability in the face of market challenges.
InvestingPro Insights
Wolverine World Wide (NYSE:WWW) appears to be at a pivotal point according to recent InvestingPro data. With a market capitalization of $1.18 billion, the company is navigating through challenging market conditions, as indicated by a revenue decline of 26.34% over the last twelve months as of Q2 2024. Despite this, the stock has demonstrated resilience with a strong year-to-date price total return of 68.19%, and an impressive one-year price total return of 81.71%, suggesting investor confidence may be buoyed by strategic moves and brand performance.
InvestingPro Tips further reveal that analysts are predicting the company will be profitable this year, aligning with Piper Sandler's optimistic outlook. This is particularly noteworthy as the company has not been profitable over the last twelve months. Additionally, Wolverine World Wide has shown a commitment to shareholder returns, maintaining dividend payments for 37 consecutive years, with a current dividend yield of 2.72%.
For investors considering Wolverine World Wide as a potential addition to their portfolio, it's worth noting that there are 10 additional InvestingPro Tips available, offering deeper insights into the company's financial health and market position. These could be particularly valuable in evaluating the company's prospects in light of Piper Sandler's Overweight rating and $18.00 price target.
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