On Tuesday, Citi analyst Paul Lejuez increased the price target for Amer Sports Inc. (NYSE: AS) to $36.00, up from the previous target of $24.00, while reaffirming a Buy rating on the stock. Currently trading at $29.74, the company has shown remarkable momentum with a 149% return over the past six months.
The decision follows a successful December equity offering by the company, which has led to an optimistic reassessment of its financial projections and growth prospects. InvestingPro analysis reveals 15+ additional investment insights for Amer Sports, including key profitability and momentum indicators.
Lejuez's revised price target reflects a positive outlook on Amer Sports' earnings per share (EPS) following a significant reduction in debt. The company plans to use approximately $1 billion in net proceeds from the equity offering to pay off term loans.
This action is expected to save Amer Sports around $55 million in interest expenses in fiscal year 2025 (F25) and bring the year-end F25 debt-to-EBITDA ratio down to 0.6x. According to InvestingPro data, the company currently operates with a moderate debt level, with a debt-to-equity ratio of 0.68x and maintains healthy liquidity with a current ratio of 1.62x.
The analyst notes the EPS accretion of about $0.05 for F25 due to the debt paydown. While the company reported a loss in the last twelve months, analysts expect profitability this year with a forecasted EPS of $0.45. Lejuez also cites the sustained momentum of Arc'teryx, a high-performing segment of Amer Sports, which continues to expand its global presence with new store openings and ventures into new product categories, such as footwear. The company's revenue growth stands at 13.4% year-over-year, with total revenue reaching $4.8 billion.
The improved free cash flow (FCF) and a stronger balance sheet are additional factors contributing to the increased confidence in Amer Sports' long-term growth. The company's overall segment performance is also noted as a positive indicator.
Looking ahead, Amer Sports is expected to deliver a positive pre-announcement at the upcoming ICR conference next week. This anticipatory statement from the analyst suggests that the company may reveal favorable updates regarding its performance and outlook.
In other recent news, Amer Sports Inc. has been the subject of several analyst upgrades following strong financial results.
TD Cowen raised its price target to $29, citing strong growth outlook and impressive Q3 results. Similarly, Baird increased its price target to $24, maintaining an Outperform rating based on robust Q3 performance and positive future outlook. UBS also expressed confidence, raising its price target from $24 to $27.
Amer Sports recently announced a public offering of 34 million ordinary shares, aiming to use the proceeds to reduce its debt. The offering was managed by BofA Securities and J.P. Morgan, with additional support from Goldman Sachs, Morgan Stanley (NYSE:MS), Citigroup (NYSE:C), and UBS Investment Bank.
The company reported a 17% year-over-year revenue increase in Q3 to $1.35 billion. Particularly noteworthy was the 34% revenue increase in the Technical Apparel segment, including Arc'teryx, to $520 million. Consequently, Amer Sports raised its full-year 2024 adjusted earnings per share guidance to $0.43-$0.45.
Moreover, Amer Sports has been experiencing robust growth in China, 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. These are the recent developments for Amer Sports, Inc.
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