On Wednesday, JPMorgan reiterated its Overweight rating on Amer Sports Inc. (NYSE:AS) with a steady price target of $19.00. The firm's positive outlook on the company is based on several key factors, including Amer Sports' portfolio of premium brands such as Arc'teryx, Salomon, Wilson, Atomic, and Peak Performance.
According to the firm, the transformational steps taken by Amer Sports' management, which include new leadership and a brand-direct operating model, are promising for the company's future. JPMorgan also highlights the accelerated direct-to-consumer (DTC) sales mix and the growing brand penetration in Greater China as catalysts for growth.
The firm projects a long-term revenue growth in the low-to-mid-teens percentage range, which is expected to be balanced across various channels, regions, and segments. Furthermore, Amer Sports is anticipated to experience an estimated growth of 22% in EBITDA over the next two years, which is expected to outpace top-line growth by 11%. This is projected to result in a mid-teens adjusted EBITDA margin.
The analyst from JPMorgan believes that these factors combined position Amer Sports for a strong and sustainable growth trajectory. The company's strategic initiatives and market expansion are seen as key drivers behind the optimistic financial outlook.
Amer Sports' focus on direct-to-consumer sales and expansion in key markets like Greater China are part of the reason for the firm's positive rating. These elements are expected to contribute to the company's revenue and EBITDA growth, supporting the $19.00 price target set by JPMorgan.
InvestingPro Insights
As Amer Sports (NYSE:AS) continues to capture the attention of investors and analysts alike, real-time data from InvestingPro offers additional insights into the company's financial health and market performance. With a market capitalization of $7.46 billion and a notable revenue growth of 23.1% in the last twelve months as of Q4 2023, the company's strategic initiatives seem to be reflecting positively on its financial outcomes.
Despite not being profitable over the last twelve months, evidenced by a negative P/E ratio of -26.06, analysts are optimistic, predicting profitability this year. This aligns with JPMorgan's positive stance, as the company's transformational strategies, including a brand-direct operating model and an accelerated DTC sales mix, are expected to drive future growth. Moreover, with gross profit margins standing strong at 52.1%, Amer Sports demonstrates a robust ability to convert revenue into gross profit.
InvestingPro Tips further reveal that while the stock has experienced a downturn over the past week, with a price total return of -7.63%, the company's liquid assets exceed its short-term obligations, indicating a solid liquidity position. For investors seeking more comprehensive analysis and additional InvestingPro Tips, there are 5 more tips available that could provide deeper insights into Amer Sports' potential. Interested readers can access these tips and make more informed investment decisions by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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