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Wall Street brokerages open coverage of Birkenstock after sandal group's IPO

Published 06/11/2023, 12:50
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Investing.com -- Several brokerages have initiated their coverage of Birkenstock (NYSE:BIRK), with many giving the German group their top rating thanks to the popularity of its luxury footwear and easing supply constraints.

Birkenstock shares debuted on the New York Stock Exchange at $41 last month, well below its initial public offering price of $46. The stock sank in its inaugural trading day, closing at $40.20 a share, dampening some enthusiasm for a nascent recovery in the recently cool IPO market.

Following typical industry practices, the flotation's almost two dozen underwriters have had to wait until this weekend to issue their ratings of the stock.

Analysts at JPMorgan (NYSE:JPM) gave Birkenstock a rating of "overweight," calling the sandal maker's current annual revenue forecast in the mid-to-high teens "prudent." Goldman Sachs (NYSE:GS) placed a "buy" rating on the stock, noting that recent supply chain challenges may be waning, supporting the firm's ability to gain market share.

Meanwhile, Stifel dubbed Birkenstock a "heritage footwear innovator," saying it has the chance to achieve "multiple years" of mid-teens topline growth and "best-in-class" core earnings margins.

"The premium nature of the product, selective distribution model and vertically integrated European manufacturing process, enable advantaged per pair economics, supporting the standout financial model," the Stifel analysts added.

Morgan Stanley (NYSE:MS), however, tempered some of the optimism, arguing that many of the aspects attracting investors to Birkenstock are "largely priced in." These analysts began their coverage with a rating of "equal-weight."

Shares in Birkenstock were slightly higher in premarket trading on Monday.

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