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Investing.com - UBS has reiterated its Neutral rating and $4.00 price target on Designer Brands (NYSE:DBI), citing the footwear retailer’s limited long-term growth potential despite its strong market position. According to InvestingPro data, the stock currently trades at $4.68, with a price-to-book ratio of 0.83x and market capitalization of $229 million.
The investment firm highlighted two key factors constraining Designer Brands’ growth outlook: the relative maturity of its main DSW banner, which appears to be losing market share to competing retail channels, and the company’s high concentration in seasonal footwear products that continues to weigh on overall sales growth. Recent financial data shows revenue of $2.92 billion with a gross profit margin of 42.3%, though revenue declined 4.6% in the last twelve months.
UBS acknowledged that Designer Brands’ second-quarter results showed sequential improvement in comparable sales with positive momentum continuing into the early part of the third quarter.
Despite these improvements, UBS expressed concern about tariff-related headwinds that are expected to negatively impact earnings in the second half of 2025 and fiscal year 2026. The firm forecasts a modest 4% six-year earnings per share compound annual growth rate for the company.
UBS concluded that this weak growth outlook would likely prevent Designer Brands’ price-to-earnings ratio from expanding, supporting the firm’s decision to maintain its Neutral stance on the stock. The company’s EV/EBITDA multiple currently stands at 17.3x, while analysts maintain consensus price targets between $4.00 and $5.00.
In other recent news, Designer Brands Inc. reported its Q2 2025 earnings, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $0.34, significantly higher than the projected $0.14, resulting in a 142.86% surprise. Revenue also exceeded forecasts, reaching $739.8 million compared to the anticipated $730.59 million. These results mark a positive development for the company. Despite the earnings beat, the company’s stock experienced a decline in the regular session, though it showed a slight rebound in premarket trading. These recent developments highlight Designer Brands’ ability to outperform analyst expectations.
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