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On Wednesday, Evercore ISI, a prominent research firm, adjusted its outlook on Amer Sports Inc. (NYSE: AS), increasing the price target from the previous $36.00 to $43.00. The firm sustained its Outperform rating on the company’s stock. The optimism appears well-founded, as InvestingPro data shows Amer Sports has delivered impressive returns, with the stock up over 150% in the past year and trading near its 52-week high of $37.99.
The revision reflects Amer Sports’ strong performance, particularly in its Technical Apparel (TA) division, which includes the Arcteryx brand. The Direct-to-Consumer (DTC) sales for this segment rose by 31%, while same-store sales (SSS) saw a 19% increase. This growth has contributed to the company’s robust revenue growth of 21.4% over the last twelve months, with total revenue reaching $5.46 billion. InvestingPro analysis reveals 20 additional key insights about Amer Sports’ performance and valuation metrics. Despite these numbers representing a slowdown from the 29% growth in the fourth quarter of 2024, the firm noted that the SSS figures were impacted by stockouts and a strategic choice to limit distribution to outlets.
The report highlighted a significant 22% growth in TA wholesale during the first quarter. Amer Sports had previously scaled back its Arcteryx wholesale operations to bolster the brand’s premium market position. However, the company now identifies a chance to re-engage with some of its former distribution channels from a full-price standpoint. Evercore ISI suggested that maintaining a robust wholesale business around the 20% mark could enhance the overall growth of the TA segment.
The analyst from Evercore ISI commented, "Two Emerging Growth Pillars—First, Arcteryx: Technical Apparel (TA), largely Arcteryx, remained the primary growth driver, led by DTC +31% and SSS +19%...a deceleration from +29% in 4Q24, though SSS was held back somewhat by stockouts and a decision to route less product to outlet. Interestingly, TA wholesale grew +22% in 1Q. After a pronounced effort to reduce Arcteryx wholesale to improve the premium positioning of the brand, AS now sees an opportunity to re-enter some of the same distribution from a more full-price position. A more durable ~20%+ wholesale business could further augment growth for the total TA segment (and drive upside to our model forecasting +LDD% rest of year)."
The revised price target is based on the potential for sustained growth in Amer Sports’ TA segment, which seems poised to continue its positive impact on the company’s financial performance. While the company maintains a healthy financial position with a current ratio of 1.66 and moderate debt levels, InvestingPro analysis indicates the stock is trading above its Fair Value, with relatively high earnings and EBITDA multiples. For detailed valuation analysis and comprehensive insights, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Amer Sports reported better-than-expected first-quarter results, posting adjusted earnings per share of $0.27, exceeding the analyst consensus estimate of $0.19. The company achieved revenue of $1.47 billion for the quarter. This performance was driven by significant growth in its Arc’teryx and Salomon brands, which grew by 28% and 25%, respectively. Citi analysts responded to these results by raising the price target for Amer Sports to $42.00 from $30.00 and maintaining a Buy rating. The analysts’ optimism is supported by the company’s robust growth and strategic initiatives, including its direct-to-consumer strategy and brand popularity. Citi projects strong double-digit earnings per share growth over the coming years, with an 80% increase anticipated in fiscal year 2025. Despite facing tariff-related challenges, Amer Sports’ management is confident in mitigating impacts through strategic measures. Investors seem optimistic about the company’s momentum, as evidenced by the positive market reaction to the earnings report.
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