Oatly stock price target maintained at $17 by DA Davidson on growth outlook

Investing.com - DA Davidson has reiterated its Buy rating on Oatly Group AB (NASDAQ:OTLY) with a price target of $17.00, representing a potential 23% upside from the current price of $13.86. The company currently has a market capitalization of $414.8 million and has shown a strong 60.8% price return over the past six months.

The research firm maintains its positive outlook on the plant-based milk producer despite acknowledging persistent consumer demand and macroeconomic challenges facing the company. According to InvestingPro analysis, Oatly is quickly burning through cash, with negative free cash flow of $72.7 million in the last twelve months.

DA Davidson expects Oatly to achieve positive EBITDA in fiscal year 2025, citing improvements in supply chain operations and reduced overhead costs as key factors.

The firm also anticipates year-over-year revenue growth in fiscal year 2026, supported by easier comparisons and growth initiatives across Europe, international markets, and North American foodservice.

DA Davidson emphasized that stock appreciation depends on Oatly demonstrating a credible path toward mid-single-digit top-line growth despite the challenging market environment.

In other recent news, Oatly Group AB reported its second-quarter 2025 earnings, which revealed a significant earnings per share (EPS) miss and a revenue shortfall compared to market expectations. The company posted an EPS of -$1.86, which was significantly below the forecasted -$0.0406, marking a surprise of over 4,481%. Revenue for the quarter was $208.35 million, falling short of the expected $216.44 million by 3.74%. In a strategic financial move, Oatly announced the issuance of SEK 1.7 billion (approximately $170 million) in senior secured floating rate bonds. These bonds are part of a broader refinancing strategy and will be used to prepay an existing $130 million term loan B credit facility and repurchase certain convertible notes. The bonds will be issued at 100 percent of nominal value with an interest rate of 3-month STIBOR plus 7.00 percent, and they have a four-year tenor. Oatly has also entered into a new SEK 750 million sustainability-linked revolving credit facility. These financial maneuvers are expected to enhance the company’s capital structure.

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