On Thursday, Citi reiterated its Buy rating on Birkenstock Holding plc (NYSE:BIRK) stock with a maintained price target of $55.00. The firm's analysis follows Birkenstock's reported second-quarter sales growth of 22% on a constant currency (cc) basis, surpassing the consensus estimates of 18%.
The Americas, Birkenstock's most established market, saw a growth acceleration to 21% cc, a bump from the first quarter's 19%. This increase was attributed to significant direct-to-consumer (DTC) growth and robust wholesale performance.
The Asia-Pacific, Middle East, and Africa (APMEA) region also demonstrated exceptional performance, with a 42% cc increase, highlighting Birkenstock's potential for expansion in these areas.
Management's optimism about continued momentum in the second half of the year is reflected in their revised full-year revenue guidance, which has been increased from a range of 17-18% to 20%, compared to a consensus of 18%.
Additionally, the company has uplifted its adjusted EBITDA forecast from €520-530 million to €535-545 million, against a consensus of €534 million.
Birkenstock's robust performance is backed by strong DTC growth, increased shelf space, and average selling price (ASP) expansion, driven by the growing demand for premium and closed-toe footwear.
The firm concluded that Birkenstock stands out in the footwear industry, marking it as a brand with a compelling narrative of exceeding expectations and sustaining brand heat. Based on these developments, Citi anticipates that Birkenstock shares are likely to experience an uptick in today's trading session.
InvestingPro Insights
Birkenstock Holding plc (NYSE:BIRK) has been performing notably in the market, and recent data from InvestingPro further underscores its financial health and growth potential. With a robust 26.75% revenue growth over the last twelve months as of Q1 2024, and a significant 7.99% return over the last week, Birkenstock is demonstrating strong performance and investor confidence. The company's impressive gross profit margin of 61.91% in the same period highlights its operational efficiency and potential for sustained profitability.
InvestingPro Tips indicate that Birkenstock is expected to grow its net income this year, which aligns with the positive outlook shared by Citi analysts. Additionally, the company's liquid assets exceed its short-term obligations, indicating a stable financial position for dealing with immediate liabilities. For investors looking for deeper insights and additional tips, there are 11 more InvestingPro Tips available, which can be explored with an exclusive offer. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
With a market capitalization of $9.39 billion and trading at a high earnings multiple, Birkenstock's valuation reflects its market sentiment and growth expectations. As the next earnings date approaches on May 30, 2024, investors will be keen to see if the company can maintain its trajectory and continue to surpass market expectations.
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