On Wednesday, Piper Sandler commenced coverage on footwear and accessories retailer Steven Madden (NASDAQ:SHOO) with a Neutral rating, setting a price target of $45.00. The firm acknowledged the company's robust operational capabilities and the strength of its management team. However, concerns about the stock's current valuation and potential cost pressures, such as freight and tariff headwinds, have led to a cautious stance.
The analyst highlighted Steven Madden's trend-resistant business model and strong brand recognition as key advantages. These factors are expected to support the growth of the company's apparel and accessories segments. This outlook is bolstered by Steven Madden's recent acquisition of the Almost Famous brand, which is anticipated to contribute positively to the company's portfolio.
Steven Madden's performance is expected to benefit from overcoming difficult wholesale trends that were present in 2023. Additionally, shifts in footwear preferences are predicted to drive low-teens earnings growth in 2024. Despite these positive aspects, Piper Sandler suggests that the potential for top-line growth and cost savings from wholesale restocking may already be reflected in the stock's price, which has risen over 40% from its 52-week low.
The price target of $45.00 is based on approximately 15 times Piper Sandler's 2025 earnings per share estimate for Steven Madden. This valuation aligns with the average of the company's peers. The firm's neutral outlook is a reflection of the balance between the recognized strengths of Steven Madden's business model and the challenges posed by external cost factors.
InvestingPro Insights
Steven Madden (NASDAQ:SHOO) has demonstrated a resilient financial stance, as evidenced by the InvestingPro Tips which highlight that the company holds more cash than debt on its balance sheet and has liquid assets that exceed its short-term obligations. This financial health is a testament to the company's robust operational capabilities and may provide a cushion against the potential cost pressures mentioned by Piper Sandler.
InvestingPro Data further reveals that Steven Madden is trading near its 52-week high with a price percentage of 94.94% of this peak, reflecting investor confidence and aligning with the stock's strong performance over the past months. The company’s P/E Ratio stands at 18.44, which is in the vicinity of the industry average, substantiating Piper Sandler's valuation approach. Additionally, the strong return over the last three months, with a 17.86% price total return, indicates a positive market sentiment that could be factored into the investment decision-making process.
For those considering investing in Steven Madden, there are additional InvestingPro Tips available that delve into the company's profitability, analysts' predictions, and more. There are 5 more tips that could provide deeper insights into the company's performance and future outlook. Interested readers can explore these tips on InvestingPro and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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