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On Tuesday, Citi analyst Monique Pollard revised the price target for Puma SE (PUM:GR) (OTC: PMMAF (OTC:PMMAF)) shares, lowering it to €32.00 from the previous €45.20. The stock, currently trading at $33.32, has declined over 28% year-to-date and is trading near its 52-week low. Despite the adjustment, the analyst maintained a Neutral rating on the stock. The revision follows the company's fourth-quarter pre-release for fiscal year 2024.InvestingPro data reveals several key indicators about Puma's current market position, with 8 additional ProTips available for subscribers.
Pollard's report included updated forecasts for Puma SE, with a reduction in expected sales growth for fiscal years 2025 and 2026 to 6.9% and 5.6%, respectively. This is a decrease from the earlier projections of 9.8% and 7.6%. While the company maintains a healthy gross margin of 47.31% and a strong current ratio of 1.45, the analyst noted that demand shows signs of softness in Latin America and the Speedcat product line has not yet gained significant momentum.
The recent strength of the Euro has led to a lowered forecast for the currency's impact on fiscal year 2025 revenue, now expected to contribute only 0.3%, down from the previous estimate of 0.9%. Consequently, the sales forecasts for fiscal years 2025 and 2026 have been decreased by 3.6% and 5.4%, respectively.
Furthermore, gross margin forecasts for the same periods have been adjusted downward by 90 and 70 basis points to 46.8% and 46.6%, reflecting the ongoing challenges posed by the strength of the US dollar and persistent promotional activities within the industry.
The report also indicated a cut in the expected EBIT margin for fiscal years 2025 and 2026 to 7.4% and 7.0%, down from the previous 8.3% for both years. This adjustment is attributed to reduced operational leverage and a cautious outlook on management's ability to achieve significant cost savings while also enhancing the brand's prestige.
As a result of these updates, the analyst's earnings per share (EPS) estimates for fiscal years 2025 and 2026 have been reduced by 17% and 24%, respectively. The new price target is based on a discounted cash flow (DCF) analysis. According to InvestingPro's Fair Value analysis, Puma SE appears significantly undervalued at current levels. Discover detailed valuation metrics and more comprehensive analysis with an InvestingPro subscription.
In other recent news, CFRA initiated coverage on Puma with a Hold rating and a 12-month price target of EUR49. This rating takes into account the company's strong global brand recognition, bolstered by successful partnerships with athletes and influencers. The firm's analysts also highlighted Puma's commitment to sustainability as a potential advantage, given the rising demand for environmentally responsible brands.
Puma's financial targets for 2024, which include mid-single-digit currency-adjusted revenue growth and Earnings Before Interest and Taxes (EBIT) between EUR620 million and EUR670 million, were also noted. These goals are supported by a robust wholesale order book, indicating promising recent developments for the company.
However, CFRA acknowledged potential challenges for Puma, including economic headwinds and subdued consumer sentiment, particularly in China. The competitive landscape, featuring major players like Nike (NYSE:NKE) and Adidas (OTC:ADDYY), could also impact Puma's market performance. Despite these challenges, CFRA forecasts Puma's Earnings Per Share (EPS) to be EUR2.15 for 2024, increasing to EUR2.80 by 2025.
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