Amer Sports rises as brokerages start coverage with focus on China demand (updated)

Anta Sports Products

26/02/2024 15:12

(Updates shares and adds comments in paragraph 7)
    By Ananya Mariam Rajesh
       Feb 26 (Reuters) - Amer Sports  AS.N  shares rose as
much as 3.5% on Monday as analysts initiated coverage with
largely bullish ratings and highlighted strong demand for the
Wilson tennis racket maker's premium outdoor and sportswear
products in China.
    The company returned to public markets on Feb. 1 after
selling shares at a discounted price in its U.S. IPO for a
valuation of $6.3 billion. China's Anta Sports  2020.HK  bought
the company in 2019.
    At least 10 brokerages, including TD Cowen and Bernstein, on
Monday rated the stock "outperform" and UBS assigned the highest
price target of $23.  
    The shares were trading at $16, giving the company a market
value of $8 billion, in early trading on Monday, compared with
the IPO price of $13.
    "I think Arc'teryx and Salomon are being well received by
the market in China. Both brands have been catering to the
region with unique in-store experiences, products and
campaigns," Jane Hali & Associates senior analyst Jessica
Ramirez said.
    TD Cowen expects China to generate 43% of the company's
total incremental sales growth into fiscal 2027. Revenue from
China rose about 68% to $593 million for the nine months ended
Sept. 30.
    "Revenues are growing, margins are growing and adjusted
EBITDA is growing. It will take some time to grow into its
valuation, but this is a business that will endure," said Thomas
Hayes, chairman of hedge fund Great Hill Capital.
    Analysts also expect Amer Sports to improve its performance
in the U.S., helped by customers upgrading sports equipment and
from Salomon's innovative running shoes that have gained market
share from Nike  NKE.N  and Adidas  ADSGn.DE .


 (Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by
Shounak Dasgupta and Sriraj Kalluvila)
 ((AnanyaMariam.Rajesh@thomsonreuters.com; Twitter: https://twitter.com/AnanyaMariam))