On Thursday, Stifel adjusted its stance on Birkenstock Holding plc (NYSE:BIRK), reducing the footwear company's price target from $70.00 to $63.00 while keeping a Hold rating on the shares.
The revision follows Birkenstock's recent financial performance, which saw the company's adjusted EBITDA surpass Stifel’s expectations, reaching €186.3 million against the firm's estimate of €184.9 million and the Street's forecast of €185.8 million.
This beat came despite the fact that revenue slightly missed the mark, with Birkenstock reporting €564.8 million, just below Stifel's projection of €566.8 million and the Street’s anticipation of €566.1 million.
The analyst noted that the profit upside was influenced by a channel mix shift towards the business-to-business (B2B) channel, which has lower selling, general, and administrative expenses (SG&A) and higher EBITDA margins.
Additionally, Birkenstock's guidance for the fiscal year 2024 suggests robust growth expectations, with revenue growth projected at the high end of 19% year-over-year (20% in constant currency) and adjusted EBITDA margin guidance set between 30% and 30.5%.
Birkenstock's closed-toe shoes have been a particular highlight, growing at twice the rate of the company's consolidated growth. The mix of closed-toe footwear has also seen a significant year-over-year improvement of 400 basis points, boosted by new products that extend beyond the popular Boston clog.
The analyst highlighted Birkenstock's position as the top share gainer in the casual footwear segment, attributing this success to factors that are likely to drive profitable growth and balance sheet improvement.
In conclusion, the analyst from Stifel expressed a positive outlook on Birkenstock's future, stating that the company's shares continue to merit a premium multiple.
The new price target of $63.00 is based on an 18x enterprise value to EBITDA (EV/EBITDA) multiple on the forecasted adjusted EBITDA of €638 million for fiscal year 2025, a slight decrease from the previous estimate of €650 million.
InvestingPro Insights
The latest data from InvestingPro reveals that Birkenstock Holding plc (NYSE:BIRK) is poised for a year of growth, with net income expected to increase. This optimistic outlook is supported by 6 analysts who have revised their earnings projections upwards for the upcoming period, signaling confidence in the company's financial trajectory. Additionally, Birkenstock's impressive gross profit margins, which stood at a robust 60.85% over the last twelve months as of Q2 2024, further underscore the company's strong operational efficiency.
While Birkenstock's P/E ratio is high at 104.36, indicating a premium valuation, the company's stock has delivered a strong return over the last year, with a 51.0% price total return. This performance is a testament to the market's positive reception of Birkenstock's strategic initiatives and product offerings. The InvestingPro platform offers additional insights, with a total of 15 InvestingPro Tips available for Birkenstock, providing a more comprehensive analysis for investors looking to delve deeper into the company's potential.
Investors may also note that Birkenstock's market capitalization stands at $11.4 billion, reflecting the company's substantial presence in the footwear industry. With a fair value estimate from analysts at $66.68 and InvestingPro's fair value at $53.37, investors have valuable benchmarks for assessing the current share price of $60.7 against potential value estimations. Such insights from InvestingPro can be instrumental in making informed investment decisions.
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