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On Thursday, Bernstein SocGen Group resumed coverage on Amer Sports Inc. (NYSE: AS), assigning an Outperform rating and setting a price target of $38.00. Currently trading at $30.13, the stock has shown remarkable momentum with a 170% gain over the past six months, according to InvestingPro data. The reinstatement comes with a positive outlook for the company, as the analyst identified several key growth drivers that could propel Amer Sports forward.
The analyst highlighted China’s expanding outdoor sportswear market as a primary factor, where a compound annual growth rate (CAGR) of 16% from 2024 to 2029 is expected to outpace the broader sector’s growth. Amer Sports has shown significant resilience in this premium segment, boasting a 47% growth in 2023 compared to the overall market’s 14%. With a solid gross profit margin of 54% and revenue growth of 13.4% in the last twelve months, the company’s premium positioning appears to be paying off. This success is attributed to the ongoing outdoor recreation boom and the Chinese government’s commitment to developing a RMB 3 trillion ecosystem for the industry.
Amer Sports’ performance in China has been particularly noteworthy, with sell-through growing at a 51% CAGR from 2021 to 2024, substantially higher than the 31% CAGR for the outdoor sector. The company is projected to increase its market share within China’s outdoor segment from 25% to 35% over the next five years, leveraging technical innovation as a key differentiator.
Beyond China, Amer Sports is also looking to expand geographically into the U.S. and EMEA markets, which are expected to serve as additional growth avenues. The analyst also pointed to the potential for margin improvement, which could stem from a mix of regional optimization, increased penetration of premium products, and an improved capital structure facilitated by debt repayment.
The forecast for Amer Sports is optimistic, with an anticipated 68% EPS growth CAGR from 2024 to 2026. Currently trading at a price-to-earnings (P/E) ratio of 43.5x, the price target set by Bernstein implies a 42x next twelve months plus one (NTM+1) P/E ratio, which implies a price-to-earnings growth (PEG) of 0.6. InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value, though it maintains a "Fair" overall financial health score. For investors seeking deeper insights, InvestingPro offers 14 additional investment tips and comprehensive valuation metrics for Amer Sports. This valuation underscores the firm’s confidence in Amer Sports’ growth trajectory and its ability to outperform in the market.
In other recent news, Amer Sports Inc. has seen a flurry of activity from financial analysts. Citi raised the price target for Amer Sports to $36 from $24, maintaining a buy rating, following a successful December equity offering by the company. This move is expected to reduce Amer Sports’ debt and save around $55 million in interest expenses in fiscal year 2025 (F25). TD Cowen also increased its price target for Amer Sports to $29 from $23, reflecting the company’s robust top-line growth, particularly through direct-to-consumer channels.
Amer Sports recently announced a public offering of 34 million ordinary shares, with the aim of using the proceeds to reduce its debt. The company’s strong third-quarter performance led to further confidence from TD Cowen, which raised the stock’s price target from $21.00 to $23.00 while maintaining a buy rating. The company’s management has projected low double-digit to mid-teen revenue growth for FY25.
In addition to these developments, Baird updated its financial outlook for Amer Sports, increasing the price target to $24.00 from the previous $20.00, while maintaining an outperform rating. This adjustment comes after Amer Sports reported third-quarter earnings that surpassed expectations, with a 4% revenue beat and a 12% rise in adjusted EBITDA. These are the latest developments in the ongoing story of Amer Sports Inc.
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