RBC lowers PUMA stock price target and EPS outlook By Investing.com

On Friday, RBC Capital Markets adjusted its outlook on PUMA SE (PUM:GR) (OTC: PUMSY), reducing the price target to €42.00 from the previous €47.00 while maintaining a Sector Perform rating on the stock. The revision follows PUMA’s second-quarter results, which the firm describes as a misstep that nevertheless could have a positive impact on the company’s near-term share price.

The analyst from RBC Capital noted that PUMA faced challenges in the second quarter of 2024, particularly with wholesale performance in the Eastern Europe, Middle East, and Africa (EEMEA) region and higher finance expenses. These issues were not adequately communicated, and the revenue guidance provided could have been set more realistically.

Despite these setbacks, RBC Capital views the situation as a “clearing event” that may bolster PUMA’s share price strength in the near term. This perspective is based on the unchanged earnings expectations, with only a slight reduction at the higher end of the guidance. The focus remains on an anticipated sharp increase in revenue in the fourth quarter of 2024, which is expected to occur at a time when the company’s valuation is considered low.

To account for the increased financial expenses, RBC Capital has revised its earnings per share (EPS) estimates for PUMA, projecting an 8 to 9 percent decrease. The new price target of €42 reflects these updated expectations. The analyst’s comments underscore the potential for PUMA’s share price to recover, despite the lowered EPS forecast and price target adjustment.

InvestingPro Insights

As investors digest the recent analysis from RBC Capital Markets on PUMA SE (PUM:GR) (OTC: PUMSY), it’s worth noting the insights provided by InvestingPro. PUMA’s commitment to its shareholders is evident through its consistent dividend increases, having raised its dividend for 3 consecutive years. This could signal confidence in the company’s financial health and future prospects, potentially offering a silver lining for investors amidst recent price fluctuations.

InvestingPro Data highlights a market capitalization of $6.09 billion for PUMA, with a P/E ratio of 21.15, reflecting the market’s valuation of the company’s earnings. While the price has seen significant drops over the last three months, with a 27.02% decline in total return, the company’s liquid assets are reported to exceed short-term obligations, suggesting a solid liquidity position that may reassure investors looking at the fundamentals.

Moreover, analysts predict PUMA will be profitable this year, and the company has been profitable over the last twelve months. This profitability, coupled with a robust gross profit margin of 47.1%, may provide a basis for potential recovery in the company’s share price, aligning with RBC Capital’s perspective of a near-term bolstering.

For those seeking a deeper dive into PUMA’s financials and future outlook, InvestingPro offers additional tips, with a total of 6 InvestingPro Tips available at https://www.investing.com/pro/PUMG. These tips could further inform investment decisions, particularly for those considering the company’s long-term potential and the implications of its recent performance.

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