Shares of the DAX 40-listed PUMA SE (DE:PUM) plummeted over 10% yesterday after the company reported disappointing sales for 2023. The top line was mainly impacted by unfavourable foreign currency movements, including a weakening Argentine peso. The company also projected a difficult trading environment for 2024.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Puma will announce its financial results for FY23 on February 27, 2024.
Here, we have used the TipRanks Earnings Calendar tool for the German market, which offers updates on upcoming earnings announcements. It serves as a useful tool to stay informed and keep track of important financial events.
PUMA is a German brand renowned worldwide for its expertise in designing sportswear, apparel, and footwear.
Unfavourable FX Rate Swings
During Q4, sales declined by 9.8% on a reported basis. When adjusted for currency effects, sales were down 4% to €1.98 billion compared to the fourth quarter of the previous year. Results were hit by a 54% devaluation of the peso in December and the application of “hyperinflationary accounting.” This accounting method requires using the year-end currency rate rather than the average rate.
Moreover, the company faced challenges due to the impact of higher interest rates and geopolitical uncertainties on consumer spending.
For the full year, currency-adjusted sales witnessed a growth of 6.6%, although, on a reported basis, sales increased only 1.6% to €8.60 billion. Earnings before interest and tax (EBIT) of €622 million aligned with the company’s guidance range of €590 million to €670 million, but was below the consensus forecast of €726 million.
Looking ahead, Puma expects a mid-single-digit currency-adjusted sales increase this year and EBIT in the range of €620 million to €700 million.
Analysts’ Reactions
RBC analyst Piral Dadhania was “surprised and disappointed” by the lower guidance, which contrasts sharply with expectations. However, Dadhania confirmed his Buy rating on the stock, predicting an upside of 66%.
Jefferies analyst James Grzinic downgraded his rating from Buy to Hold with a forecast of just a 4% upside in the stock.
Meanwhile, analyst Olivia Townsend from J.P. Morgan reiterated a Hold rating on the stock, forecasting an upside of 30%.
Puma Stock Price Prediction
According to TipRanks’ analyst consensus, PUM stock has a Moderate Buy rating based on a total of 11 recommendations, of which six are Buy. The Puma share price prediction is €65.17, which shows a positive change of 70% in the share price.
