On Monday, JPMorgan (NYSE:JPM) initiated coverage on Amer Sports Inc. (NYSE:AS) with an Overweight rating and a price target of $19.00, pointing to the company's potential for significant growth. The firm highlighted Amer Sports' strong brand portfolio, particularly the Arc’teryx brand, as a key driver of its optimistic outlook. Amer Sports' strategic business transformation between fiscal years 2020 and 2022 has laid the groundwork for sustained revenue and EBITDA growth.
According to JPMorgan, Amer Sports is well-positioned to capture market share within the $450 billion global athletic apparel, footwear, and equipment total addressable market. The firm attributes this to Amer Sports' diverse mix of leading brands, innovative product development, direct-to-consumer (DTC) marketing strategy, and substantial global presence, including an 18% sales mix in China.
JPMorgan's positive stance is further bolstered by Amer Sports' ongoing revenue growth and profitability. The firm projects an 11% compound annual growth rate in revenue through fiscal year 2025, which is conservatively estimated below the 21% CAGR from fiscal years 2020 to 2023. This forecast is supported by a mid-teens EBITDA margin, with the Arc’teryx brand expected to continue its early-stage growth across various markets, channels, and categories.
The investment bank also noted the Arc’teryx brand's EBITDA margins, which stand approximately 10 points higher than Amer Sports' consolidated portfolio. This is in addition to the balanced go-to-market strategies of other brands in the portfolio, such as Salomon and Wilson, which are expected to contribute to the company's overall growth trajectory.
JPMorgan's analysis suggests that Amer Sports is entering a phase of low-to-mid-teens revenue increase and mid-to-high-teens adjusted EBITDA growth annually. The company's direct-to-consumer strategy, which currently accounts for 33% of sales and is growing at over 20%, is identified as a significant growth facilitator.
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