On Wednesday, UBS reaffirmed its confidence in Amer Sports Inc. (NYSE: AS) by increasing its price target from $24.00 to $27.00 while maintaining a Buy rating on the stock.
The adjustment comes after Amer Sports' third-quarter financial report, which prompted UBS to revise its outlook based on the company's full-year 2024 sales, gross margin, and earnings per share (EPS) guidance upgrades.
The company's stock experienced a notable rise of 5.8% on the day of the earnings announcement, outperforming the S&P 500's modest gain of 0.4%. UBS attributes this performance to Amer's robust fundamentals and the potential for continued growth, particularly for its Arc'teryx brand and in the Chinese market.
Despite the challenging consumer environment, UBS believes that Amer Sports holds strong market fundamentals. The firm anticipates a 32% compound annual growth rate (CAGR) in EPS for Amer Sports over the next four years. This expectation supports a 27 times price-to-earnings (P/E) ratio, which UBS views as justified by the company's growth trajectory.
UBS forecasts that Amer Sports will deliver positive surprises in its EPS in the upcoming quarters. This, according to the firm, should act as a catalyst for the stock, propelling it towards the newly set price target of $27.00. UBS's stance indicates a positive outlook for Amer Sports' performance in the near term.
In other recent news, Amer Sports Inc. has reported robust Q3 results, exceeding expectations due to solid performance across its brand portfolio and geographic regions.
The sports equipment and apparel maker's revenue rose 17% year-over-year to $1.35 billion, outpacing the $1.3 billion reported in the same period last year. Adjusted earnings per share were reported at $0.14 for the quarter, slightly below analyst estimates of $0.15.
In light of these recent developments, Amer Sports has also raised its full-year earnings guidance. The company's Technical Apparel segment, which includes Arc'teryx, saw revenue jump 34% to $520 million. The Outdoor Performance segment, featuring brands like Salomon, grew 8% to $534 million, while Ball (NYSE:BALL) & Racquet Sports revenue increased 11% to $300 million.
Finally, Amer Sports raised its full-year 2024 adjusted earnings per share guidance to $0.43-$0.45, up from its previous outlook and above the consensus estimate of $0.41. The company now expects full-year revenue growth of 16-17%.
InvestingPro Insights
Amer Sports Inc.'s recent performance aligns with several key insights from InvestingPro. The company's revenue growth of 17.32% over the last twelve months supports UBS's optimistic outlook. This growth trajectory is further reinforced by an InvestingPro Tip indicating that net income is expected to grow this year, which could contribute to the anticipated EPS growth mentioned in the article.
The stock's strong recent performance is reflected in InvestingPro data, showing a 51.65% price return over the last three months and a 54.25% return over the past year. This aligns with UBS's observation of the stock's outperformance relative to the S&P 500. Additionally, an InvestingPro Tip notes that the stock is trading near its 52-week high, currently at 98.9% of that level, which corroborates the positive momentum discussed in the article.
While UBS focuses on Amer Sports' growth potential, it's worth noting that InvestingPro data shows the company is not currently profitable, with a P/E ratio of -94.84 for the last twelve months. However, an InvestingPro Tip suggests that analysts predict the company will be profitable this year, which could support UBS's bullish stance on future earnings.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Amer Sports, providing a deeper understanding of the company's financial health and market position.
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