On Monday, BofA Securities initiated coverage on Amer Sports Inc. (NYSE: AS) with a Buy rating, accompanied by a price target of $18.00. The firm's analysis highlights Amer Sports as a conglomerate of high-end, performance-oriented brands, including Arc'teryx, Salomon, and Wilson.
The coverage launch reflects a positive outlook on the company's financial prospects, citing a compelling valuation at 15.5 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). This valuation takes into account an anticipated 13% increase in sales and a 20% rise in EBITDA over the forthcoming three-year period.
The price objective of $18.00 set by BofA Securities is based on an EV/EBITDA multiple of 17.5 times. This target is further reinforced by a detailed sum of the parts analysis conducted by the firm. The sum of the parts analysis is a valuation method where each segment of a company is valued separately before adding them together to get the total enterprise value.
The analyst's commentary underscores the strength of Amer Sports' brand portfolio, which is expected to drive the company's growth. The premium nature of the brands under Amer Sports is seen as a key factor in the company's robust sales and EBITDA projections.
BofA Securities' coverage initiation serves as a signal to investors regarding the potential of Amer Sports in the market. The Buy rating suggests confidence in the company's ability to perform well in the upcoming years, reflecting a positive investment stance on Amer Sports shares.
InvestingPro Insights
As Amer Sports Inc. (NYSE: AS) garners a favorable Buy rating from BofA Securities with an ambitious price target of $18.00, InvestingPro data and insights provide additional context for investors considering this brand conglomerate. With a significant market capitalization of $7.85 billion, Amer Sports is recognized for its high-end, performance-oriented brands. However, the company's valuation multiples suggest a premium market sentiment. The Price / Book multiple as of Q3 2023 stands at an elevated 2296.72, indicating a high expectation of future growth built into the current price.
InvestingPro Tips shed light on some challenges and opportunities for Amer Sports. The company is trading at a high EBITDA valuation multiple, which aligns with BofA Securities' valuation approach but also indicates that the market may be pricing in optimistic future performance. Additionally, Amer Sports has not been profitable over the last twelve months, which is an essential factor for investors to consider. On the positive side, the company's liquid assets exceed its short-term obligations, providing a cushion for operational flexibility.
Investors seeking a deeper dive into Amer Sports' financial health and future prospects can find an array of InvestingPro Tips at https://www.investing.com/pro/AS. With a total of 12 additional tips available on InvestingPro, subscribers can gain a more nuanced understanding of the stock's potential. For those interested in a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24 to get an additional 10% off, enhancing your investment research toolkit with valuable insights.
The company's strong return over the last three months, as reflected in a 15.97% price total return, suggests a recent positive momentum, which could be a response to strategic initiatives or market conditions favoring Amer Sports' brand portfolio. This performance is particularly noteworthy for investors looking for companies with the potential for short-term gains. However, the company's forward-looking profitability remains a question, as analysts do not anticipate Amer Sports will be profitable this year, according to InvestingPro Tips.
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