On Monday, Seaport Global Securities adjusted its position on Wolverine World Wide (NYSE:WWW), raising the footwear company's stock rating from Neutral to Buy. The firm has set a new price target for Wolverine World Wide at $15.00, indicating a positive outlook for the company's future performance despite an anticipated decline in sales growth for the fiscal year 2024 (FY24).
The company is poised to report its first quarter 2024 earnings on Wednesday, May 8th. While Wolverine World Wide's financial outlook for FY24 does not appear particularly strong, with an expected double-digit percentage decrease in sales growth, Seaport Global's decision to upgrade the stock is based on underlying factors that are expected to drive growth in fiscal year 2025 (FY25) and beyond.
Seaport Global's optimism is fueled by the increasing momentum of the Saucony brand, which is benefiting from the growing demand for lifestyle running footwear. Additionally, there is a belief that the hiking boot segment is close to reaching a low point, which should alleviate some of the pressure on the Merrell brand in future periods.
Wolverine World Wide has characterized FY24 as a transitional phase, with the anticipation of accelerating growth in FY25. Seaport Global anticipates that the current consumer demand will lead to increased sell-through rates, which in turn will boost sell-in figures and ultimately enhance wholesale sales growth. The firm expects that the positive trends observed at present will lead to improved financial results beginning with the company's spring prebook orders.
The $15.00 price target assigned by Seaport Global is based on a cash-adjusted price-to-earnings (P/E) ratio of 16 times, which aligns with the average P/E ratio of Wolverine World Wide's peers. This valuation reflects the firm's confidence in the company's potential to match industry standards and its prospects for growth in the following year.
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