BofA raises Birkenstock stock target to $73 on strong sales growth

On Thursday, BofA Securities expressed a positive outlook on Birkenstock Holding plc (NYSE: NYSE:BIRK), adjusting the company’s price target upward to $73.00 from the previous $70.00 while maintaining a Buy rating. Currently trading at $57.76 with a market capitalization of $10.2 billion, Birkenstock has shown strong momentum with a 19.6% return over the past six months. According to InvestingPro analysis, the company’s current valuation appears slightly above its Fair Value. The firm’s analysts highlighted Birkenstock’s sustained brand popularity, which they believe will continue to drive sales growth and margin expansion, even in the face of tariff pressures.

Birkenstock reported a second-quarter adjusted EBITDA of €200 million, surpassing BofA Securities’ estimates by 4.5% due to higher sales, which saw an 18% increase in constant currency terms, and a gross margin improvement of 140 basis points. The company maintains impressive gross profit margins of 58.7% and has earned a "GREAT" financial health score from InvestingPro, with strong liquidity indicated by a current ratio of 2.84. Sales growth was evenly distributed across channels, with wholesale and direct-to-consumer (DTC) both up by 19%. Geographically, the Americas led with a 20% increase, followed by EMEA at 12%, and APAC at an impressive 30% growth.

The company’s management team has observed no significant changes in demand or consumer behavior. In light of the robust second-quarter performance, Birkenstock has adjusted its sales guidance to the higher end of the previously forecasted 15-17% range. Additionally, the company raised its EBITDA margin guidance by 50 basis points to a new range of 31.3%-31.8%.

Following these results, BofA Securities has increased its fiscal year 2025 and 2026 EBITDA forecasts for Birkenstock by 4.8% and 3.5%, respectively. The analysts cited improved gross margins resulting from cost efficiencies and effective pricing strategies that offset inflationary impacts. The revised price objective of $73 is grounded in a valuation of 17 times the estimated enterprise value to EBITDA for calendar year 2026, reflecting the firm’s heightened expectations for Birkenstock’s financial performance. For deeper insights into Birkenstock’s valuation metrics, including its current EV/EBITDA multiple of 20.35x and P/E ratio of 36x, along with 10+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Birkenstock Holding plc reported a strong second fiscal quarter, exceeding expectations in both revenue and profit margins. The company experienced significant growth in its direct-to-consumer sales, prompting an upward revision of its revenue and adjusted EBITDA margin forecasts. BMO Capital Markets increased their price target for Birkenstock to $75, while maintaining an Outperform rating, citing the brand’s impressive performance and strategic positioning. Similarly, BTIG and UBS raised their price targets to $72, each maintaining a Buy rating, highlighting the company’s resilience in navigating economic challenges. Morgan Stanley maintained an Overweight rating with a $57 target, noting Birkenstock’s ability to outperform peers in the apparel and footwear sectors. Analysts emphasized the company’s strong brand presence and growth potential, despite the broader economic headwinds and potential tariff impacts. The company’s expansion into "closed-toe" shoe styles and improved gross margins were also noted as positive developments. These updates reflect a strong confidence among analysts in Birkenstock’s ability to sustain growth in the current market environment.

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