Stock Story -
What Happened: Shares of outerwear manufacturer Columbia Sportswear (NASDAQ:COLM) jumped 5.4% in the morning session after Stifel analyst upgraded the stock's rating from Hold to Buy and raised the price target from $84 to $92. The new price target represents a potential 15% upside from where shares traded when the upgrade was announced. The analyst cited "high potential for positive revenue surprise beginning FY4Q and into FY25." Other factors supporting the bullish rating include a "combination of co's balance sheet strength and low investor expectations." After the initial pop the shares cooled down to $79.12, up 3.9% from previous close.
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What is the market telling us: Columbia Sportswear's shares are not very volatile than the market average and over the last year have had only 1 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago, when the stock gained 10.6% on the news that the company reported a "beat and raise" quarter. First-quarter results blew past analysts 'EPS expectations, and revenue also came in ahead of consensus estimates. However, near-term sales demand is likely to be pressured as the company called out a challenging market in North America due to inflation.
Looking ahead, full-year EPS guidance was raised and is above Wall Street's estimates, adding to the positivity of the print.
To demonstrate the resolve towards improving its bottom-line via its profit improvement program, management noted the business is on track to deliver between $125 million and $150 million in savings by 2026, including $75 million to $90 million in cost savings this year.
Some of these savings will likely be channeled towards returning value to shareholders, as demonstrated by the announcement of a regular quarterly cash dividend of $0.30 per share, payable on May 30, 2024, to shareholders of record on May 16, 2024.
Overall, this quarter's results still seemed fairly positive, and shareholders should feel optimistic.
Columbia Sportswear is down 0.3% since the beginning of the year, but at $79.12 per share it is still trading close to its 52-week high of $86.98 from June 2024. Investors who bought $1,000 worth of Columbia Sportswear's shares 5 years ago would now be looking at an investment worth $777.39.
