On Thursday, Citi updated its financial outlook for Steven Madden , Ltd. (NASDAQ: NASDAQ:SHOO), raising the footwear company's price target from $41.00 to $43.00, while maintaining a Neutral rating on the stock.
The adjustment follows Steven Madden's fourth-quarter earnings per share (EPS) surpassing consensus estimates, primarily due to lower taxes. The company's sales outperformed expectations, driven by direct-to-consumer (DTC) business, although gross margin (GM) was not as strong.
For fiscal year 2024, Steven Madden has provided EPS guidance in the range of $2.55 to $2.65, which is slightly below the consensus estimate of $2.69. However, the forecast is considered more optimistic than anticipated, supported by a robust top-line guidance projecting an 11-13% increase, surpassing the consensus projection of 8.5%.
This outlook suggests mid-single-digit organic growth, which is more promising than initially expected.
The company's DTC segment has shown positive trends quarter-to-date, particularly in boot demand, which has been influenced by the announcement of Beyoncé's new album, highlighting a surge in cowboy boots.
Steven Madde's Management anticipates organic wholesale footwear growth ranging from low to mid-single digits, as retailers adapt to ordering patterns that align more closely with current demand trends.
Despite the solid fiscal 2024 outlook and management's confidence in fashion trends, Citi notes that the forecast for DTC sales growth at a high single-digit rate could present a risk.
With Steven Madden's shares currently trading at an estimated fiscal 2024 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of approximately 12 times, Citi believes that the risk/reward profile is balanced at the stock's current trading levels.
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