On Monday, TD Cowen adjusted its outlook on shares of Amer Sports Inc. (NYSE: AS), raising the price target to $29 from the previous $23 while retaining a Buy rating on the stock.
The company, currently valued at $12.64 billion, has shown impressive momentum with an 87% return over the past year. The revision reflects updated estimates for sales, interest expense, future tax rates, and debt reduction following Amer Sports' significant share offering earlier this year.
The share offering, which amounted to $938 million on September 4, 2024, has led to an upward revision of the company's earnings per share (EPS) estimates by 6% for FY25 and 8% for FY26.
The firm anticipates Amer Sports to benefit from multi-year value creation through strategic debt paydown, refinancing, and a lower tax rate, which could justify higher valuation multiples in the future.InvestingPro analysis reveals the company operates with moderate debt levels and maintains strong liquidity, with current assets exceeding short-term obligations.
Amer Sports, known for its brands such as Arc'teryx and Salomon, is experiencing robust top-line growth of 13.4% year-over-year, particularly through direct-to-consumer (DTC) channels, which is driving margin expansion to 54%. The company's performance and premium positioning in outdoor categories and style are gaining traction in North America and China.
The firm's analysis suggests that Amer Sports' growth in China is sustainable, with projections indicating a rise in sales from $838 million in FY23 to an expected $1.633 billion by FY26. This would represent a three-year compound annual growth rate (CAGR) of 25% for the company's sales in China.
Such growth implies that Amer Sports could generate an additional $794 million in sales from the region over the next three years, accounting for 41% of the company's incremental sales during that timeframe. According to InvestingPro, the stock appears overvalued at current trading levels, despite its strong growth prospects.
In other recent news, Amer Sports, Inc. has announced a public offering of 34 million ordinary shares, with a 30-day option for underwriters to purchase an additional 5.1 million shares. The proceeds will be used to reduce the company's debt.
BofA Securities and J.P. Morgan are the joint book-running managers for the offering, with Goldman Sachs, Morgan Stanley (NYSE:MS), Citigroup (NYSE:C), and UBS Investment Bank also serving as bookrunners.
Amer Sports has also reported strong Q3 results, with a 17% year-over-year revenue increase to $1.35 billion. The company's Technical Apparel segment, which includes Arc'teryx, saw a significant 34% revenue jump to $520 million. Consequently, Amer Sports raised its full-year 2024 adjusted earnings per share guidance to $0.43-$0.45, above the consensus estimate of $0.41.
These adjustments followed Amer Sports' strong Q3 performance and optimistic forecasts for future financial growth. These are the recent developments for Amer Sports, Inc.
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