Barclays lowers target price on Dr Martens

Analysts at Barclays cut their target price on iconic bootmaker Dr Martens from 480.0p to 360.0p on Wednesday but said it still sees as much as 50% upside to the stock's current price.

Barclays noted that Dr Martens had recently published consensus estimates that came ahead of its close period and, given a March year-end, it believes that the company continues to be in a position to achieve market expectations.

The bank, which reiterated its 'overweight' rating on Dr Martens' stock said it had updated its model to reflect stronger EMEA and Americas revenue and a weaker APAC performance.

"We make no changes to FY22 EPS but have lowered revenues slightly and raised margins. This implies Q4 revenue growth of +28% (1-year), and 53% (2-year)," said the analysts.

Barclays also noted that despite having the benefit of lapping early Covid comps, the latter would be the strongest two-year growth rate in FY22, and should be "credibility enhancing" for Dr Martens' management.

"Many investors were skeptical over guidance given acceleration required in Q4, so this would be supportive in helping build a public market track record. For FY23, we lower revenue/EPS by 1% reflecting macro factors, taking us to the bottom of the consensus range, or 4% below the FY23 company consensus EPS midpoint," said the analysts.

"On our forecasts, the company is trading on a Mar-23 PE of 13x and an EV/EBITDA of 8.4x, which we consider attractive for a global branded goods company with EBITDA margins of c28%."