On Friday, BMO Capital Markets adjusted its outlook on Birkenstock Holding plc (NYSE:BIRK), increasing the share price target to $60 from the previous $54 while maintaining an Outperform rating on the stock. The revision follows Birkenstock's second-quarter performance, which showcased a top and bottom-line beat, propelled by robust sales that exceeded gross margin (GM) and operating expense (OpEx) expectations.
Both retail and business-to-business (B2B) channels reported solid performance, with the company's management highlighting the strong B2B sell-through. In response to the positive results, Birkenstock's management has revised its full-year guidance upward for revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), also reaffirming its medium to long-term targets for GM and adjusted EBITDA at around 60% and greater than 30%, respectively.
The analyst noted Birkenstock's continued growth in both unit sales and average selling price (ASP), as well as the brand's successful expansion into closed-toe shoe designs. The company's balance sheet (BS) deleveraging was also acknowledged, along with a commitment to further improvements in this area.
In summary, the BMO Capital analyst anticipates sustained sales growth and robust EBITDA performance for Birkenstock. This optimism is based on the potential for further brand expansion and continued balance sheet enhancement, which underpin the raised $60 target price for Birkenstock shares.
InvestingPro Insights
Birkenstock Holding plc (NYSE:BIRK) has recently drawn attention with its impressive second-quarter results, and the latest data from InvestingPro bolsters this positive outlook. With a market capitalization of $10.48 billion and a high gross profit margin of 61.91% in the last twelve months as of Q1 2024, Birkenstock demonstrates a strong financial position. The company's revenue growth of 26.75% over the same period further underscores its robust performance.
InvestingPro Tips highlight the company's expected net income growth this year and its significant return over the last week, with a price total return of 16.03%. These metrics suggest that investors are responding well to Birkenstock's recent developments.
Moreover, the company's liquid assets exceed short-term obligations, providing it with a cushion for operational flexibility. For investors looking to delve deeper into Birkenstock's potential, there are over 10 additional InvestingPro Tips available, which can be accessed at https://www.investing.com/pro/BIRK. To enrich your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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