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On Monday, JPMorgan initiated coverage of Amer Sports, Inc. (NYSE:AS) with an Overweight rating and a price target of $19.00, pointing to the company's strong growth potential. The company highlighted Amer Sports' strong brand portfolio, particularly the Arc'teryx brand, as a key factor in its optimistic outlook. Amer Sports' strategic business transformation from FY2020 to FY2022 laid the foundation for sustainable earnings and EBITDA growth.
According to JPMorgan, Amer Sports is well-positioned to capture market share within the $450 billion target global sports apparel, footwear and equipment market. The company attributes this to Amer Sports' diverse mix of leading brands, innovative product development, direct-to-consumer (DTC) marketing strategy, and substantial global presence, including 18% of sales mix in China. We believe that this is the case.
JP Morgan's proactive stance is further reinforced by Amer Sports' continued revenue growth and profitability. The company predicts a CAGR of 11% in revenue through fiscal 2025, which is conservatively estimated at a CAGR of 21% from 2020 to fiscal 2023. It will go below. This prediction is supported by his mid-teens EBITDA margin for Arc'teryx. The brand is expected to continue its early stage growth across different markets, channels and categories.
The investment bank also noted that the Arc'teryx brand's EBITDA margin is approximately 10 percentage points higher than Amer Sports' consolidated portfolio. This is in addition to a balanced go-to-market strategy for other brands in the portfolio, such as Salomon and Wilson, and is expected to contribute to the company's overall growth trajectory.
According to JPMorgan analysis, Amer Sports is entering a phase of annual revenue growth in the low to mid-teens and adjusted EBITDA growth in the mid-to-high teens. The company's direct-to-consumer strategy currently accounts for 33% of its sales and has grown by more than 20%, and is recognized as a key growth driver.
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