Shares of PUMA SE (DE:PUM) plunged today after the company’s net income fell to €282 million in 2024, down from €305 million a year ago. PUMA attributed the decline to increased interest payments on its debt, which impacted income. The results were in stark contrast to those of its rival adidas (DE:ADS), which reported strong numbers yesterday, driven by high demand for its retro sneakers. adidas’ full-year operating profit soared to €1.34 billion in 2024, up from €268 million in 2023.
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Following the results, PUM stock fell by over 19% as of writing.
PUMA Takes Action with Cost-Cutting Plan
For the full year, PUMA’s sales increased by 4.4% at constant currency to €8.8 billion, in line with the outlook. The company stated that while it achieved solid sales growth in 2024, it is not satisfied with its profitability.
As a result, the company launched ‘nextlevel,’ a cost-cutting plan designed to improve margins and operational performance. The company aims to achieve an EBIT (earnings before interest and tax) margin of 8.5% by 2027, up from 7.1% in 2024. Additionally, PUMA is targeting a long-term EBIT margin of 10%.
Morgan Stanley Analyst Shares Insights
Morgan Stanley analyst Grace Smalley pointed out that PUMA’s EBIT target of 8.5% by 2027 represents a downgrade from the previous guidance, which aimed to reach that level by 2025.
Smalley further stated that the company’s negative outlook is opposite of what it said in November. She believes this shift is likely due to worse-than-expected results in Latin America, a stronger U.S. dollar, and the ongoing challenges in building its brand momentum.
Is PUMA a Good Stock to Buy?
On TipRanks, PUM stock has a Moderate Buy rating, supported by 16 recommendations, including eight Buys and eight Holds. The PUMA share price forecast is €54.87, representing a huge upside of 61% from the current levels.
These ratings were given before the 2024 results announcement and may change after analysts reassess the stock.
