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Allbirds gains analysts’ confidence despite mixed Q3 results

By Angela Gonzalez-Rodriguez

Dec 1, 2021

Business |ANALYSIS

Image: Albbirds, official site

Shares in sustainable shoemaker Allbirds fell in after-hours trading Tuesday after reporting mixed third-quarter earnings. Allbirds enjoyed a 33 percent year-on-year sales increase for the period although missed market’s expectations with its full-year sales outlook.

The environmentally conscious footwear brand reported revenue of 62.7 million dollars, what implies a 33 percent leap from a year ago and 40 percent above the comparable period in 2019. Allbirds attributed the sales improvement to good performance in the U.S. market. The company’s executives said its physical retail stores in the U.S. did well during the quarter and highlighted the interest arisen from its new Perform Apparel line.

The company now expects net sales to come in at 270 million dollars to 272 million dollars for its full year, below consensus estimates, according to FactSet.

Similarly, Allbirds lost 25 cents per share during the quarter, what was significantly worse than the FactSheet’s estimated average 11-cent per-share loss .

Analysts positive on Allbirds stock’s future

Shares in Allbirds Inc. (NASDAQ:BIRD) are overall securing positive ratings from analysts who have already started covering the stock. Cowen rates the shares as ‘Outperform’ on a price target of 24 dollars apiece, while positive ratings are in as well from Telsey and Baird (both rating the shares as ‘outperform’ with price targets of 25 dollars and 26 dollars respectively), Stifel (Buy), KeyBanc (Overweight), Guggenheim (Buy) and Piper Sandler (Overweight).

Keybanc analyst Edward Yruma sums up the bullish vibe by saying BIRD offers a combination of “compelling” product, omnichannel model, and a brand rooted in sustainability that position it well for long-term growth.

More cautious are Morgan Stanley and JPMorgan, whose analysts remain neutral and recommend a price range of 21 -23 dollars. JPMorgan’s analysts explain their cautious take explaining that “BIRD’s growth is highly dependent on new store growth contributions, new product launches, and brand awareness growth. On the bottom-line, BIRD has yet to achieve profitability with management outlining an opportunity to achieve mid-to-high-teens operating margins in the medium-term and 20 percent+ long-term.”

“Allbirds’ focus on sustainability will be a key differentiator both from a consumer and investor perspective,” Bank of America analysts wrote in a market note. “The uniqueness of sourcing sustainable materials (i.e. wool, tree, sugar cane) helps Allbirds stand out relative to peers and will likely continue to increase as consumers incorporate higher sustainability standards into products they buy. The other advantage is centered on the amount of investing dollars that continues to shift into ESG funds.” They have a 23 dollars price target on the stock.

It’s worth recalling that Allbirds is now trending in the 20 dollars region after the IPO was priced at 15 dollars.

Image: Allbirds