On Wednesday, Stifel, a financial services firm, upgraded the stock of Wolverine World Wide (NYSE:WWW) from Hold to Buy, adjusting the price target upward to $29.00 from the previous $21.00. The stock, currently trading at $22.72, has shown remarkable strength with a 161% gain year-to-date, according to InvestingPro data.
The firm anticipates 2025 to be a pivotal year for the company, driven by a combination of factors including strong spring orders, ongoing momentum of the Saucony brand, and expansion of distribution channels. These elements are expected to enhance the company's growth visibility into the following year and shift investor focus towards Wolverine's multi-year earnings potential.
The analyst from Stifel notes that Wolverine World Wide is positioned to achieve high-single-digit growth rates in 2025. This growth is projected to help the company reduce its net leverage to 2.3 times by the end of the fiscal year 2025.
Currently, InvestingPro data shows the company's debt-to-equity ratio stands at 2.98x, with a current ratio of 1.23x, highlighting the importance of this deleveraging goal. The firm emphasizes that Wolverine's ability to execute on revenue growth opportunities in 2025 will lend credibility to its long-term financial goals, which include mid-single-digit plus revenue growth, gross margins of 45-47%, a mid-teens operating margin, and a net leverage ratio of 1.5 to 2.0 times.
The upgrade reflects a positive outlook on Wolverine's financial health and strategic progress. Stifel acknowledges that previous concerns over debt led to a cautious approach in evaluating the company's improvement potential. However, with ongoing signs of foundational improvements and revenue momentum, the analyst expects a shift in the valuation framework from EV/EBITDA to P/E, with investor focus turning towards the company's future opportunities.
According to Stifel's analysis, Wolverine World Wide's shares are currently discounting over $1.60 in fiscal year 2026 earnings power. This is based on a high-teens earnings multiple projected over the next 12 months.
InvestingPro analysis indicates the stock is currently trading above its Fair Value, with an EV/EBITDA multiple of 105.22x. Investors seeking deeper insights can access the comprehensive Pro Research Report, which provides detailed analysis of WWW along with 1,400+ other US stocks. The firm's revised stance on the stock indicates a belief in Wolverine's potential for sustained financial performance and growth in the medium term.
In other recent news, Wolverine Worldwide reported third-quarter fiscal 2024 earnings that exceeded market expectations, with revenue reaching $440 million, surpassing a forecasted $420 million. Despite a 7% decline in revenue compared to the same period last year, the global footwear and apparel company demonstrated signs of recovery from previous quarters. The company's adjusted gross margin reached a record 45.3%, prompting it to raise its financial outlook for the year.
In other developments, Merrell brand's revenue grew by 1.4%, while Sweaty Betty saw a 3% revenue increase. However, the company's work group segment declined by 11% due to supply chain issues. The full-year revenue guidance has been raised to between $1.73 billion and $1.745 billion.
Recent analyst notes suggest optimism for Wolverine Worldwide's growth into 2025, focusing on brand building and operational capabilities. The company is preparing to launch new products, including Merrell's Speed Arc Collection in January, and has announced a partnership with country music star Jordan Davis.
Despite these positive developments, Saucony's revenue declined by 10% and the overall revenue for Q3 showed a 7% year-over-year decline.
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