Analysts had constructive sentiments about Birkenstock as they initiated protection in the marketplace’s latest footwear inventory to kick off the week.
The German firm made its debut on the New York Inventory Change in October after pricing an IPO at $46 per share, for an $8.6 billion valuation. Shares of the shoe model fell 12.6 % to $40.20 on the corporate’s first day in the marketplace and fell one other 6.6 % to $37.55 the following day.
Amid a broader market rebound up to now week, the inventory picked again up. Monday, shares closed as much as $41.16.
Of their notes initiating protection, analysts highlighted Birkenstock’s model historical past, loyal shopper base, product assortment and distribution mannequin as constructive property that may assist the inventory improve in worth over time.
In his notice saying a $55 worth goal, Williams Buying and selling analyst Sam Poser chalked up the model’s tough first days in the marketplace to “under-appreciation of Birkenstock’s heritage, tradition, product, breadth of product alternatives and execution.”
This wealthy historical past, mixed with sturdy model administration and a agency grasp of a shortage enterprise mannequin, offers Poser confidence “the inventory can be buying and selling effectively increased than it’s immediately” when it releases earnings for the primary time, he wrote.
“Birkenstock has confirmed over the past 10 years [that it can] meticulously drive constant gross sales development with business main margins,” Poser wrote.
Jefferies analyst Randal Konik additionally highlighted Birkenstock’s fame as a “historic model with a loyal buyer base” in his notice, giving the inventory a $50 worth goal.
“We imagine the corporate’s evolution right into a universally identified model with a loyal buyer base speaks to the corporate’s potential to proceed to adapt and develop new silhouettes to keep up current clients whereas additionally attracting new ones,” wrote Konik. “Transferring ahead, we imagine the corporate can leverage its well-known model, and its vertically built-in multi-channel distribution mannequin to additional enhance model consciousness and improve its addressable market.”
Within the prospectus doc filed for its IPO, Birkenstock famous its engrained presence with sure shoppers and stated that the feminist motion spurred demand for Birkenstock as early because the ’90s, when girls took to the sandals to “free themselves from long-standing vogue norms that required sporting painful excessive heels and different constricting footwear.” Extra just lately, Birkenstock performed a central function within the field workplace smash hit, “Barbie,” which sparked a 110 % improve on searches for Birkenstock Arizonas following its launch, in line with Lyst.
BMO Capital Markets analyst Simeon Siegel stated there may be nonetheless extra runway for development inside core enterprise, product extension and geographic growth in his notice, introduced a goal worth of $50 and an “outperform” ranking for the inventory.
“We imagine Birkenstock represents a model with vital top-line whitespace forward,” Siegel stated, additionally noting Birkenstock’s “confirmed monitor file of persistently rising common promoting worth.”
One other profit to Birkenstock, Stifel analyst Jim Duffy identified, is its working mannequin, which consolidates most of its product manufacturing in German amenities. This permits for “full oversight of high quality management all through the manufacturing course of, and insulation from potential upstream provide challenges,” Duffy stated.
“The distinctive vertically built-in European working mannequin prioritizes distribution high quality and provide chain management, in comparison with the business customary of sourcing product primarily from Asia,” Duffy wrote.
Worldwide growth is one other space of alternative for the model, learn a notice from HSBC International Analysis.
“It seems that BIRK’s consciousness could be very low exterior of 4 key nations: Germany, the U.S., the U.Okay. and France,” learn the notice. “And which means, on paper, the model may grow to be a lot greater in years forward if it manages to construct on that consciousness extra broadly.”