Goldman Sachs initiated research coverage on Amer Sports (AS) with a Buy rating and a price target of $21, implying a 35% potential upside from current levels.
“We view AS as a compelling portfolio of premium, innovation-led brands with healthy growth opportunity,” analysts wrote in a note.
AS rose 3% ahead of Monday’s market open.
Analysts believe that AS possesses considerable potential for profitable expansion and margin enhancement driven by several factors, primarily the opportunity for increased market share in structurally favorable end markets, with a particular focus on the Arc’teryx brand.
In addition, sustained growth through direct-to-consumer initiatives, including expanding units, is also seen as a key driver.
“Despite healthy DTC growth in recent years, AS is still largely a wholesale-led company. We believe that select DTC investments across brands should drive growth and brand momentum at higher margins,” analysts noted.
Moreover, the company is positioned for further expansion through both category diversification and geographical reach, with ongoing growth initiatives in China following significant investments in recent years as well as “margin expansion driven by growth in profitable geographies and brands,” analysts said.
On the other hand, potential risks for AS include dependency on Arc’teryx brand's performance, heightened exposure to the China market, susceptibility to geopolitical and macroeconomic impacts, and competition in the US and European sporting goods channels, which could affect growth and profitability, Goldman said in the note.