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Investing.com - JPMorgan has upgraded Xtep International (HK:1368) (OTC:XTEPY) from Neutral to Overweight while raising its price target to HK$7.40 from HK$5.60.
The upgrade reflects an improving earnings growth outlook for the Chinese sportswear company, driven by increased earnings contribution from its fast-growing Saucony business and resilient growth of the core Xtep brand.
JPMorgan has raised its 2025-27 earnings estimates for Xtep by 1-3%, with the new price target implying 11.6x/10.1x 2026E/2027E PE ratios based on a DCF valuation extended to December 2026.
Following encouraging results that showed better-than-expected first-half operating margins for Saucony and resilience in the core Xtep brand amid competition, the stock rose 6% while the Hang Seng Index fell 1%.
JPMorgan expects further rerating of the stock, supported by improving retail sell-through momentum beginning in the third quarter and rising contribution from the Saucony business.
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