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On Friday, UBS analyst Robert Krankowski downgraded Puma (OTC:PMMAF) SE stock from Neutral to Sell, significantly reducing the price target to €19.50 from the previous €43.90. The downgrade follows a steep decline in the company’s share value, with the stock plummeting 49% year-to-date and trading near its 52-week low of $23.56. According to InvestingPro data, three analysts have recently revised their earnings downward, while technical indicators suggest the stock is in oversold territory.
Krankowski’s assessment points to structural challenges that Puma may face, potentially impacting the company’s revenue growth and profit margins beyond 2025. Recent data from InvestingPro shows revenue growth already declining at -3.47%, though the company maintains a healthy gross profit margin of 47.31%. He predicts a modest compound foreign exchange growth of about 3% and anticipates margins around 5%. The analyst suggests that these issues could lead to further downward adjustments in estimates.
The concerns highlighted by UBS include a need for a strategic overhaul due to a rapidly changing competitive landscape, which might force Puma to reevaluate its profit margin goals in favor of increased investments. Additionally, a shift towards a direct-to-consumer (DTC) sales channel, which has grown to represent approximately 28% of Puma’s sales, is seen as a structural obstacle for the EBIT margin.
Krankowski also notes the intensifying competition Puma faces in the wholesale channel from industry giants like Adidas (OTC:ADDYY) and Nike (NYSE:NKE). In light of these factors, UBS has revised its earnings per share (EPS) projections downwards by 54%, 64%, and 64% for the fiscal years 2025 to 2027, respectively. The new Sell rating reflects UBS’s outlook on the potential risks to Puma’s future financial performance.
In other recent news, Puma SE has faced several analyst adjustments and updates regarding its financial outlook. BNP Paribas (OTC:BNPQY) Exane downgraded Puma’s stock from Outperform to Neutral, citing concerns over the company’s near-term financial outlook and potential declining profits. The downgrade follows Puma’s profit warning and revised guidance that anticipates profits falling short of consensus due to deteriorating sales trends and unfavorable currency impacts. UBS maintained a Neutral rating on Puma, highlighting challenges such as increased costs and competition in the wholesale channel, which could impact the company’s margin goals despite its efficiency program.
Citi also maintained a Neutral rating while lowering the price target for Puma shares to €32.00 from €45.20. The adjustment was influenced by revised sales growth forecasts and reduced expectations for the company’s EBIT margin due to operational challenges and currency impacts. Analysts at Citi noted a decrease in expected sales growth for fiscal years 2025 and 2026, alongside a reduction in gross margin forecasts. The ongoing strength of the Euro and the US dollar, combined with persistent promotional activities, are contributing factors to these adjustments.
These recent developments indicate that Puma SE is navigating a challenging economic environment, with analysts expressing caution about its ability to meet financial targets. Investors will likely monitor Puma’s future financial results closely, along with any updates regarding its sales strategies and market performance.
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