Wells Fargo has adjusted its stance on Amer Sports Inc. (NYSE: AS), downgrading the stock from Overweight to Equal Weight and increasing the price target to $19.00.
The adjustment comes as Amer Sports shares have experienced a significant surge over the past few months, with an increase of over 85% since early August, outperforming the S&P 500's gain of 12% during the same period.
The analyst from Wells Fargo noted that the stock's recent performance was partly driven by macroeconomic factors, including stimulus news from China.
The growth momentum has been reflected in Amer Sports' robust growth in China, which saw an increase of over 50% in the first half of 2024. The company had a rocky start to its initial public offering (IPO) in early February, with shares pricing at $13, below the targeted range of $16 to $18.
Despite the initial challenges post-IPO, Amer Sports has shown considerable resilience. The company's share price rally since early August has been fueled by both the company's strong performance, particularly in China, and broader economic stimuli.
The Wells Fargo analyst believes that with Amer Sports now trading at approximately 14 times next twelve months (NTM) EBITDA, the stock's risk/reward profile appears to be more balanced.
In other recent news, Amer Sports, a leading global sports and outdoor brand group, reported a significant 60% revenue increase during the Golden Week period in Greater China, attributed to the successful performance of its brands Salomon, Wilson, and Arc'teryx.
In addition to this, the company's second-quarter results surpassed expectations with a revenue beat and an adjusted EBITDA that exceeded forecasts. Analyst firms Baird, BofA Securities, Deutsche Bank, Wells Fargo, and Citi have all maintained their positive ratings on Amer Sports, reflecting confidence in the company's strong momentum.
Despite an operating loss, Amer Sports' adjusted operating profit increased by 40%, and the net loss decreased substantially. The company raised its full-year guidance, now anticipating revenue growth of 15-17%.
InvestingPro Insights
Recent data from InvestingPro adds context to Wells Fargo's analysis of Amer Sports Inc. (NYSE:AS). The company's market capitalization stands at $9.88 billion, reflecting its significant presence in the sports equipment industry. Amer Sports has demonstrated strong revenue growth, with a 17.32% increase over the last twelve months as of Q2 2024, reaching $4.64 billion. This aligns with the company's robust performance mentioned in the article, particularly in the Chinese market.
InvestingPro Tips highlight that Amer Sports is expected to become profitable this year, which could be a positive sign for investors despite the company not being profitable over the last twelve months. The stock's recent performance is also noteworthy, with InvestingPro data showing a 34.8% return over the last month and a substantial 63.68% return over the last three months. These figures corroborate the article's mention of the stock's significant surge since early August.
It's worth noting that InvestingPro offers 13 additional tips for Amer Sports, providing a more comprehensive analysis for interested investors. These insights could be particularly valuable given the stock's recent volatility and the changing analyst perspectives discussed in the article.
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