On Wednesday, Stifel financial firm adjusted its valuation of Tod's SpA (TOD:IM) (OTC: TDPAY), a luxury fashion company, raising the stock price target to €43.00 from the previous €34.00, while maintaining a Hold rating on the stock.
The revision follows Tod's announcement of fiscal year 2023 earnings, which surpassed expectations with an 8% beat on consensus earnings before interest and taxes (EBIT). Despite the positive performance, the company's outlook for 2024 remains cautiously optimistic, with an affirmation of mid-single digit growth expectations.
The analyst at Stifel noted the better-than-expected profitability in Tod's financial results, leading to an increase in the firm's earnings per share (EPS) estimates for fiscal years 2024 and 2025 by 9%. The new price target of €43 per share is set in alignment with the tender offer price launched by L Catterton in February 2024.
The offer is part of a strategy to potentially delist Tod's Group from the stock exchange, a move that could be executed if more than 90% of the company's capital is tendered or through a merger with a non-listed entity.
The tender offer by L Catterton is a significant factor in the revised valuation as it aims to acquire a controlling stake that would allow for the delisting of Tod's. Currently, shares not subject to the offer account for 64% of the share capital and 73.36% of the voting rights, which is a qualified majority.
In the event of a merger being the chosen path to delisting, shareholders who do not tender their shares would either receive stock in the resulting non-listed company or a liquidation value. This liquidation value would be calculated based on the average closing price of the shares during the six months leading up to the announcement of the shareholder meeting where the merger is to be decided.
Stifel's updated price target reflects the tender offer price and takes into account the potential changes in Tod's corporate structure. The financial firm's analysis indicates a valuation that aligns with the current efforts to restructure the ownership of Tod's Group.
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