Goldman Sachs turns bullish on Birkenstock, citing profit potential, entry point

Citing Birkenstock’s potential to gain market share in a fragmented industry, its vertically integrated European manufacturing model, and an appealing valuation, Goldman Sachs upgraded the stock to Buy from Neutral — lifting shares 3% in Thursday’s premarket trading.

“Whilst we navigate a challenging macro backdrop and a highly competitive footwear market, Birkenstock looks attractive given its strong product proposition with pricing power, and opportunities to take shares underpinned by its iconic footbed,” Goldman Sachs analyst Louise Singlehurst said in a note to investors, forecasting 15% compound annual growth rate in operating profit over the next three years.

With the share price down 12% over the last six months despite two consecutive quarters of double-digit sales growth, Singlehurst sees the current share price as an attractive entry point and sets a $60 target price for the stock, a 17.5% premium to Wednesday’s closing price.

With a 3% gain in premarket trading, Birkenstock (NYSE:BIRK) is set to open above its 200-day moving average.