Why Birkenstock Is Still a Buy After Earnings
Birkenstock shares are soaring Wednesday after the sandal maker beat expectations for its fiscal fourth quarter. Here's what Wall Street has to say.
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Birkenstock Holding (BIRK) shares are trading higher Wednesday after the footwear maker beat top- and bottom-line expectations for its fiscal 2024 fourth quarter.
In the three months ending September 30, Birkenstock's revenue increased 21.7% year over year to 455.8 million euros, due in part to 26% growth in its business-to-business (B2B) segment to 240.2 million euros and a 17.7% jump in its direct-to-consumer (DTC) segment to 214.9 million euros. Its net profit more than doubled from the year-ago period to 29 euro cents per share.
"I'm proud to be reporting very strong 2024 results, with both revenue and adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] coming in ahead of our expectations," said Birkenstock CEO Oliver Reichert in a statement. "As we continue to gain the attention of consumers and wholesale partners, we are seeing strong, balanced growth in both our DTC and B2B channels."
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The results beat analysts' expectations. Wall Street was anticipating revenue of 455.8 million euros and earnings of 26 euro cents per share, according to CNBC.
"As we look into 2025 and beyond, we are confident in our ability to deliver on our medium to long-term objectives for mid-to-high teens revenue growth, gross profit margin of around 60% and adjusted EBITDA margin of over 30%," Reichert said.
Is Birkenstock a buy, sell or hold?
Birkenstock shares are up more than 23% for the year to date, slightly lagging the broader S&P 500's nearly 27% gain. But Wall Street remains bullish on the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for BIRK stock is $65.35, representing implied upside of almost 17% to the December 17 close. Additionally, the consensus recommendation is a Buy. Analysts may very well raise their price targets in the days and weeks ahead following the earnings beat.
Financial services firm UBS Global Research is one of the more bullish outfits on the retail stock with a Buy rating and $85 price target.
"We think BIRK's sales and earnings per share outlook warrants a higher valuation," wrote UBS analyst Jay Sole in a December 10 note. "We believe Birkenstock has the potential to expand its dominance as a premium casual footwear brand with a presence globally."
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