UBS maintains sell on Columbia Sportswear, $60 price target

On Wednesday, UBS reaffirmed its Sell rating on Columbia Sportswear (NASDAQ:COLM), maintaining a $60.00 price target for the company’s stock. UBS analysts cited several ongoing challenges for the outdoor apparel company, including heightened competition and continuous selling, general, and administrative (SG&A) cost deleverage. These factors contributed to Columbia Sportswear’s fourth-quarter margin falling short of expectations and a fiscal year 2025 guidance that was less robust than anticipated.

The analysts at UBS believe these issues will likely persist in the near term, leading to earnings per share (EPS) for Columbia Sportswear that may not meet market expectations. As a result, they predict that investor sentiment towards the company could deteriorate. UBS forecasts a 7% compound annual growth rate (CAGR) in EPS for Columbia Sportswear over the next five years, which they argue supports a 13 times price-to-earnings (P/E) ratio. The company currently trades at a P/E of 22.44x, with analysts forecasting EPS of $4.11 for FY2024. InvestingPro analysis suggests the stock is currently overvalued based on its Fair Value model. Subscribers can access 6 additional ProTips and comprehensive valuation metrics in the Pro Research Report.

The UBS team’s analysis suggests that the $60 price target represents a potential 30% downside from the current stock price. Their assessment indicates a skew in the risk-reward balance, with the possibility of downside outweighing the potential for upside gains by nearly two to one.

The reaffirmation of the Sell rating and price target by UBS follows Columbia Sportswear’s latest financial disclosures. The company, known for its portfolio of outdoor brands, has been navigating a challenging retail environment marked by stiff competition and pressure on margins. The outlook provided by UBS reflects a cautious stance on the company’s ability to overcome these hurdles in the short to medium term.

In other recent news, Columbia Sportswear Company reported fourth quarter earnings that fell short of analyst expectations, alongside a disappointing forecast for the upcoming year. The outdoor apparel maker’s fourth quarter earnings per share were $1.80, missing the analyst consensus of $1.86. However, the company’s revenue for the quarter stood at $1.1 billion, slightly above estimates of $1.07 billion, marking a 3% YoY increase.

For the full year 2025, Columbia Sportswear anticipates earnings per share between $3.80 and $4.15, notably lower than the $4.35 analysts were expecting. The company’s projected revenue ranges from $3.40 billion to $3.47 billion, also falling short of the consensus estimate of $3.48 billion. These recent developments indicate potential challenges for the company.

Despite the disappointing guidance, Columbia Sportswear reported some positive fourth quarter developments, including a 50 basis point expansion in gross margin to 51.1% and a 21% increase in operating income to $137.3 million. The company ended the quarter with $815.5 million in cash and no borrowings, while inventory levels saw a 7% YoY decrease to $690.5 million.

Looking into the first quarter of 2025, Columbia Sportswear anticipates a 1-3% YoY decline in revenue to $749-$764 million, with earnings per share projected between $0.62 and $0.70. This outlook underscores the company’s ongoing efforts to attract younger consumers through its new "ACCELERATE" growth strategy.

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