Williams Trading lifts Wolverine stock target to $21 on tariff ease

On Tuesday, Williams Trading analyst Sam Poser increased the price target for Wolverine World Wide (NYSE:WWW) to $21.00, up from the previous $21.00, while maintaining a Buy rating on the stock. The company, currently trading at $16.67 with a market capitalization of $1.35 billion, has shown remarkable momentum with a 17% gain in the past week. Poser’s optimism is fueled by the recent U.S-China agreement that reduces tariffs on Chinese imports from 145% to 30% for a 90-day period starting May 12, 2025. According to InvestingPro data, the stock is currently trading near its Fair Value, suggesting balanced market pricing. This tariff reduction has prompted the analyst to revise estimates upward.

Poser’s commentary highlighted several factors supporting the revised price target. The company’s first-quarter earnings and revenue for 2025 surpassed expectations, and second-quarter guidance aligned with consensus estimates. Notably, the brands Saucony and Merrell showed strong performance in the first quarter, with sales increasing by 29.6% and 13.2%, respectively. Poser suggested that had Wolverine management been aware of the tariff reductions last week, they would have likely increased their full-year 2025 guidance.

The analyst also pointed out that the previously high tariffs on Chinese goods were expected to impact Wolverine’s revenue growth more than profit margins. The company’s first-quarter inventory levels were the cleanest since the first quarter of 2020, and product content quality has also improved. Williams Trading has raised its full-year 2025 gross margin estimate for Wolverine from 44.9% to 45.3%, a 70 basis points increase year-over-year, but still 20 basis points below the initial guidance that was provided in February and later retracted. InvestingPro analysis reveals the company maintains a FAIR financial health score of 2.36, with particularly strong momentum metrics. Notably, the company has maintained dividend payments for 38 consecutive years, demonstrating consistent shareholder returns.

Poser further adjusted revenue estimates, expecting a rise from 4.1% to 4.7%, based on the strong performance of Saucony and Merrell. The analyst’s revenue growth expectations for Wolverine’s active group have been adjusted several times in the past few months, reflecting changes in market conditions and company performance, ultimately reaching an 8.5% growth projection today, influenced by the easing of China tariffs.

Lastly, the report noted that Wolverine will produce less than 10% of its U.S. product in China in the current year, and it is anticipated that the figure will drop below 5% in fiscal year 2026. The geographic mix of Wolverine’s sales volume in dollars and units is also seen as favorable for cost control, with approximately 51% of revenue coming from the U.S., though only 46% of total pairs sold are within the country. InvestingPro shows analyst targets ranging from $17 to $25, with multiple additional insights available through the platform’s comprehensive Pro Research Report, one of 1,400+ detailed company analyses available to subscribers.

In other recent news, Wolverine World Wide reported its first-quarter 2025 earnings with an EPS of $0.18, which fell short of the expected $0.25. Despite the earnings miss, the company’s revenue reached $412 million, slightly below the anticipated $425.94 million. The company noted strong growth in its Saucony and Merrell brands, with Saucony achieving a 30% revenue increase and Merrell seeing a 13% rise. In light of uncertainties, Wolverine withdrew its full-year 2025 guidance but provided second-quarter projections aligning with consensus revenue estimates.

Analyst firms have responded positively to Wolverine’s strategic initiatives. UBS raised its price target for Wolverine shares to $22, maintaining a Buy rating, citing the company’s effective turnaround strategy and brand investments. Williams Trading also increased its price target to $19, emphasizing the strong performance of the Saucony and Merrell brands. Both firms highlighted Wolverine’s efforts to mitigate tariff impacts by diversifying manufacturing locations, projecting less than 10% of U.S. products to be sourced from China this year.

Wolverine’s decision to focus on a "relative scarcity pull" model for its key brands is seen as a strategic move to enhance brand management amid tariff challenges. The company continues to emphasize operational efficiency and brand investment as key components of its growth strategy, reflecting analysts’ confidence in Wolverine’s ability to navigate market headwinds.

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