Nov 7, 2023
The bulk of Wall Street analysts say Birkenstock Holding Plc shares are a solid fit for investors, striking a bullish tone less than a month after the German shoe manufacturer’s initial public offering was seen a flop.
With the customary quiet period for firms that participated in the IPO coming to an end, most analysts are telling investors to buy the stock, which is down about 10% from the IPO price for its Oct. 11 listing. The shares were steady on Monday in New York.
Following its weak debut, which was seen as a result of bad market timing, the maker of cork-soled sandals now has 11 buy recommendations, versus seven holds and zero sells, data compiled by Bloomberg show. The company has an average price 12-month target of $46.51, around 13% above Friday’s close of $41.16 and compared with the $46 IPO price.
“A comfortable investment,” is how BMO Capital Markets analyst Simeon Siegel described the shares in a note giving the stock an outperform rating. He cited potential ahead through growth in its core offering, product extension and geographic expansion.
Piper Sandler analysts Edward Yruma and Abbie Zvejnieks were similarly bullish. They noted that while Birkenstock stands to benefit in the near-term from fashion trends, areas such as wellness and craftsmanship are poised to be a key growth driver for the next year.
“Birkenstock has unique characteristics of both a luxury brand and performance footwear brand, which differentiate it from brands within our broader coverage,” they wrote in a note grading the shares overweight.
Last month, Birkenstock stumbled in its trading debut, falling 12.6% in what was, at the time, the worst first-day showing for a US listing of $1 billion or more in over two years, data compiled by Bloomberg show.
Some banks came out with a less bullish take.
“Birkenstock’s equity story possesses a number of attractions from a financial standpoint,” Morgan Stanley analysts led by Edouard Aubin wrote, highlighting what they said is industry-leading profitability and expanding free cash flow.
However, Aubin rated the stock equal-weight, seeing these positives as “largely priced in.”
At HSBC Holdings Plc, Erwan Rambourg praised the fundamentals of the company, and noted that its lack of exposure to China was a “silver lining,” as the economic backdrop there is making some investors nervous.
However, the analyst gives the stock a hold based on valuation, which he said doesn’t look compelling at current levels.
“Are difficult beginnings likely to affect the stock long term? Not necessarily: as fundamentals are powerful, a slightly more palatable valuation level could make this a good long-term fit,” Rambourg wrote in a note.