HSBC upgrades Birkenstock to Buy with growth concerns overdone

HSBC analyst Erwan Rambourg upgraded Birkenstock (BIRK) to Buy from Hold with a price target of $60, up from $58. The firm says concerns over the company’s recent direct-to-consumer slowdown are overblown. The shares have sold off since the August earnings report on concerns over brand strength and growth as Birkenstock’s wholesale business outperformed the direct-to-consumer segment, the analyst tells investors in a research note. HSBC, however, does not “subscribe at all to the idea that sales for the brand have peaked in any market.” While the brand generates half of its sales in the U.S., there is “much growth to be had there” and following investment in production facilities, Birkenstock’s growth in Asia – an entire continent where climate should make the brand a natural fit – should be strong over the next few years from a low base, contends HSBC.