On Friday, Telsey Advisory Group increased the price target for Birkenstock Holding plc (NYSE:BIRK) shares to $63.00, up from the previous target of $58.00.
The firm has sustained its Outperform rating on the stock, following Birkenstock's robust performance in the second fiscal quarter (F2Q) of 2024, which led to an improved annual forecast.
This positive adjustment comes despite the current challenges posed by a volatile global macroeconomic climate and ongoing inflationary pressures.
Birkenstock has been recognized for its enduring position as a premium lifestyle brand within the global footwear industry. The company's recent initiatives, including investments to enhance its supply chain, have increased manufacturing capacity while preserving its strategy of product scarcity.
These efforts have contributed to Birkenstock's ability to attract and retain a dedicated customer base and to explore new avenues for growth in both product categories and distribution channels.
The company's direct-to-consumer (DTC) expansion efforts are aimed at establishing a closer connection with customers, which is expected to lead to greater control over the brand and improved profit margins.
Additionally, Birkenstock's expansion into new product categories, such as closed-toe shoes—which accounted for over 25% of F2Q revenue compared to the high teens in the previous year—has been successful in driving higher average selling prices (ASPs). This shift has had a positive impact on both revenue and margins.
The revised price target of $63 reflects a 17x multiple on Birkenstock's projected adjusted EBITDA for the next two years, which aligns with the company's average next twelve months (NTM) multiple to date.
Telsey's continued confidence in Birkenstock's growth trajectory and market position underpins the decision to maintain the Outperform rating and elevate the price target.
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