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Investing.com - William Blair has reiterated its Outperform rating on Birkenstock Holding plc (NYSE:BIRK) while adjusting revenue estimates due to currency translation impacts. According to InvestingPro data, the company maintains impressive gross profit margins of 59% and is currently trading below its Fair Value, suggesting potential upside opportunity.
The investment firm lowered its revenue and profit projections for Birkenstock, citing the negative effect of a weaker dollar on the company’s Americas segment, which accounts for approximately half of sales in that region. This currency impact is expected to create a 400 to 500 basis point drag on Americas growth rate, reducing it to roughly 10% from the previously estimated 14.5% to 15.0%. Despite these headwinds, InvestingPro data shows the company achieved strong revenue growth of 19.9% over the last twelve months, with analysts forecasting 17% growth for fiscal 2025.
William Blair now forecasts Birkenstock’s total revenue growth for the fiscal third quarter at 12.0% to 12.5%, down from its previous estimate of 14.5% to 15.0% and slightly below the consensus expectation of 13.5% to 14.0%. The firm maintained its growth projections for other regions, anticipating low-teens growth in EMEA and 20% growth in APAC.
The revised outlook is partially offset by Birkenstock’s recent price increase in the U.S. market, estimated at approximately 2.5% based on website checks. This price adjustment was implemented at the beginning of July and will be in effect for the entire fiscal fourth quarter.
Despite the currency headwinds, William Blair noted that Birkenstock’s underlying sales trends remain healthy, with rolling 12-month Google (NASDAQ:GOOGL) search interest continuing on an upward trajectory both globally and in the U.S., and the company expanding its retail presence with a second store opening in the Netherlands during the quarter. InvestingPro analysis reveals the company’s strong financial position, with a current ratio of 3.06 indicating robust liquidity, and an overall Financial Health score of GOOD. Get access to 8 more exclusive InvestingPro Tips and comprehensive financial analysis in the Pro Research Report, available for over 1,400 US stocks.
In other recent news, Birkenstock Holding plc has reported significant developments that have caught the attention of several analyst firms. The company announced an impressive second-quarter performance with a direct-to-consumer growth of 17% and an 18% increase in revenue in constant currency terms, leading to a raised financial guidance for fiscal year 2025. Notably, Birkenstock’s adjusted EBITDA for the second quarter reached €200 million, surpassing expectations due to robust sales and improved gross margins. Analysts from Williams Trading, Stifel, BofA Securities, and BTIG have responded positively, raising their price targets for the company to $73, $70, $73, and $72, respectively, while maintaining Buy ratings.
Williams Trading praised Birkenstock’s brand management and financial performance, highlighting its high margins and consistent full-price sales. Stifel noted the company’s successful revenue growth and gross margin performance, attributing it to increased global brand awareness and effective pricing strategies. BofA Securities emphasized the company’s strong sales growth and margin expansion, adjusting their fiscal year 2025 and 2026 EBITDA forecasts upwards. BTIG also highlighted Birkenstock’s exceptional performance in the retail sector despite macroeconomic challenges, expecting the company to deliver double-digit revenue growth.
Bernstein, while maintaining a Market Perform rating with a $57 target, acknowledged Birkenstock’s strong direct-to-consumer growth and raised guidance but noted some uncertainties for the remainder of fiscal year 2025. Overall, these recent developments reflect a positive outlook for Birkenstock, driven by strong brand performance and strategic management decisions.
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