UBS reiterates Buy rating on Amer Sports stock, maintains $52 price target

Investing.com - UBS has reiterated its Buy rating on Amer Sports Inc. (NYSE:AS) with a price target of $52.00, citing strong growth potential for the company’s Arc’teryx and Salomon brands. Currently trading at $37.20, the stock has delivered an impressive 169% return over the past year, with InvestingPro data showing robust revenue growth of 22% in the last twelve months.

The investment firm believes the market currently underappreciates the strength of Amer’s business model and its positioning in China. UBS also notes that Amer is still in the early stages of unlocking growth opportunities in the United States. This view is supported by the company’s strong financial health score of 2.83 (GOOD) and healthy current ratio of 1.6.

UBS forecasts Amer Sports will deliver a 31% five-year earnings per share (EPS) compound annual growth rate (CAGR), with more upside potential than previously anticipated. The firm uses a 40x price-to-earnings (P/E) ratio in its valuation, which it justifies based on the expected growth rate and favorable risk-reward profile.

The investment bank expects EPS surprises over the near-term to support a premium valuation for the stock and help drive the share price toward its $52 target.

UBS indicated its conviction in the Buy thesis strengthened following meetings with Amer Sports management.

In other recent news, Amer Sports reported impressive second-quarter results, surpassing earnings expectations with an earnings per share of $0.06, against an anticipated loss of $0.02. The company’s revenue saw a significant increase of 23%, reaching $1.24 billion. This strong performance was driven by notable growth in its Technical Apparel and Outdoor Performance segments, with the Salomon footwear division contributing significantly. Following these results, Amer Sports raised its full-year guidance, indicating a positive outlook for the remainder of the year.

In response to these developments, several analyst firms have adjusted their stock price targets for Amer Sports. TD Cowen raised its price target to $44, maintaining a Buy rating, while Baird increased its target to $45, citing strong growth, particularly from the Arc’teryx and Salomon brands. UBS also raised its price target to $52, highlighting growth opportunities for these key brands. Despite these positive indicators, Amer Sports’ stock experienced a decline, though analysts remain optimistic about its future prospects.

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