Telsey cuts Wolverine stock target to $17, keeps market perform

On Thursday, Telsey Advisory Group adjusted its outlook on Wolverine World Wide shares (NYSE:WWW), reducing the price target from $23.00 to $17.00 while sustaining a Market Perform rating. The stock has experienced significant volatility, dropping 17.22% in the past week despite posting a 75.31% gain over the last year, according to InvestingPro data. The move followed Wolverine World Wide’s announcement of its financial results for the fourth quarter, which showed a return to revenue growth for the first time since the first quarter of 2023. The company reported earnings per share that aligned with expectations and revenues that exceeded forecasts, with current revenue standing at $1.76 billion.

Wolverine’s performance in the fourth quarter was uneven across its brand portfolio. Wolverine brand itself was a significant contributor to the overall revenue increase, while Merrell showed modest progress with a 1% rise in revenue. On the other hand, both Saucony and Sweaty Betty experienced mid-single digit revenue declines. Despite these mixed results, Telsey noted the company’s return to growth in the fourth quarter, highlighting its effective inventory management, with a 36% reduction, and efforts to reduce debt as positive steps toward strengthening the balance sheet. InvestingPro analysis reveals the company maintains a current ratio of 1.29 and has impressively maintained dividend payments for 38 consecutive years, demonstrating long-term financial stability despite current challenges.

The company’s outlook for fiscal year 2025, however, did not meet market expectations in terms of revenue and earnings. Even though the gross margin forecast was positive, Wolverine World Wide plans to continue investing in its brands and capabilities. The analyst at Telsey pointed out the necessity for further development across the company’s brand portfolio and cited potential challenges from the macroeconomic environment and the company’s exposure to the wholesale channel.

In light of these factors and based on revised estimates, Telsey has set the new price target at $17.00. This target suggests a valuation multiple of 11.5 times the firm’s two-year forward earnings per share estimate of $1.48. This is compared to the three-year next twelve months (NTM) average multiple of 10.1x and the recent multiple of 13.3x. The analyst’s comments underscored a cautious but observant stance on Wolverine World Wide’s stock as the company navigates its turnaround efforts and market conditions.

In other recent news, Wolverine Worldwide reported its fourth-quarter 2024 earnings, which aligned with analyst expectations, showing an earnings per share (EPS) of $0.42. The company reported revenue of $495 million for the quarter, slightly exceeding the forecast of $492.12 million. Despite meeting these forecasts, Wolverine’s stock faced a decline, reflecting investor concerns about future growth prospects. For the fiscal year 2024, the company achieved a revenue of $1.75 billion, which marked a 12.1% decline from the previous year, yet it showed improvements in gross margin and net debt reduction.

Wolverine Worldwide has also provided guidance for 2025, projecting revenue growth between 2.5% and 4.3% and an adjusted EPS range of $1.05 to $1.20, indicating a potential increase of 25% to 41%. Stifel analysts recently adjusted their price target for Wolverine shares to $27.00 from $29.00, maintaining a Buy rating despite challenges like foreign exchange headwinds. They noted positive indicators such as growth in the Merrell and Saucony brands and praised the company’s significant reduction in inventories and improved net leverage.

Stifel remains optimistic about Wolverine’s conservative guidance for 2025, suggesting potential for upward revisions, particularly with the Saucony brand. The analysts project an EPS of $1.23 for fiscal year 2025, slightly above the company’s guidance range, and believe the shares could exceed financial expectations. Wolverine’s management highlighted their focus on innovation and new product launches, which they anticipate will drive future growth and profitability.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.