UBS reiterates Buy rating on Amer Sports stock, cites positive Q3 guidance

Amer Sports (NYSE:AS) has received reinforced positive sentiment from investment firms, with UBS maintaining a Buy rating and HSBC upgrading to Buy, following the company's upwardly revised Q3 guidance and new long-term financial targets. The company now projects high-20s percentage revenue growth for Q3 and anticipates low-double-digit to mid-teens long-term revenue growth alongside annual EBIT margin expansion of 30-70 basis points, leading analysts to view the outlook favorably and suggesting the long-term guidance may be conservative given its strong performance and 152% stock return over the past year.

Analysis

Amer Sports (AS) is exhibiting strong positive momentum, driven by an upward revision to its Q3 guidance and the issuance of new long-term financial targets, which has been met with broad-based analyst support. The company now anticipates Q3 revenue growth in the high 20s percentage range, a significant increase from the previous ~20% forecast, and expects its adjusted operating margin to surpass the high end of its prior 12-13% guidance. This operational strength is complemented by new long-term targets of low-double-digit to mid-teens revenue growth and 30-70 basis points of annual EBIT margin expansion, implying a margin between 13.7% and 15.7% by fiscal 2030. In response, UBS maintained its Buy rating and $52 price target, HSBC upgraded the stock to Buy with a $50 target, and BofA Securities raised its target to $46. A key insight from analysts is the perception that this long-term guidance is conservative and beatable, particularly as the company is already outperforming projections set during its early 2024 IPO. This view is reinforced by the fact that nine analysts have revised their earnings estimates upward. Furthermore, HSBC's upgrade highlights a crucial strategic development: Amer's growth is becoming more balanced and global, reducing dependency on the Arc’teryx brand and the Greater China market. UBS's EPS estimates for FY27 also incorporate an assumption of $100 million in annual share buybacks post-FY25, signaling a potential future catalyst for capital returns.

Key Decisions for Investors

• Given the upgraded guidance, multiple analyst buy ratings, and the view that long-term targets are conservative, the current environment presents a strong bullish case for maintaining or initiating an overweight position in Amer Sports.
• Investors should monitor the company's execution on its global diversification strategy beyond Arc’teryx and Greater China, as this is a key factor cited for the improved outlook and is crucial for de-risking the growth narrative.
• The potential for consistent earnings beats against what is perceived as conservative guidance, coupled with the prospect of share buybacks commencing after fiscal 2025, represents a significant source of potential future alpha.
• Closely track the company's ability to deliver the projected 30-70 basis points of annual EBIT margin expansion, as consistent achievement of this target is fundamental to realizing the long-term value proposition and validating current analyst price targets.