On Thursday, B.Riley set a new price target for Solo Brands (NYSE: DTC), reducing it to $2.20 from the previous $4.00, while maintaining a neutral stance on the company's shares. The adjustment follows the company's fourth-quarter earnings, which aligned with its pre-announced figures, and the release of its 2024 adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin guidance. The guidance suggested an EBITDA that fell short of market expectations, with a projected range of $49 million to $60 million compared to the anticipated $70 million.
The shortfall is attributed to increased spending on sales, general, and administrative investments, including internal hiring and external marketing efforts. Despite these challenges, the newly appointed CEO, Mr. Metz, has been seen as a sign of potential brand portfolio monetization. However, the CEO clarified that Solo Brands is not for sale, emphasizing a commitment to organic growth and internal improvements.
The CEO's confidence in addressing the company's issues has been noted, but the market is expected to adopt a cautious 'wait and see' attitude. The future performance of the direct-to-consumer sales channel is anticipated to be a decisive factor for the stock's movement. As a result of these developments, B.Riley has revised its estimates and reiterated its neutral rating, with the price target moving from $4.00 to $2.20.
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