Barclays upgraded Dr Martens to ‘overweight’ from ‘equalweight’ on Wednesday, keeping the price target at 480p, as it argued that the iconic footwear company has an “attractive brand with many levers to drive revenue and EBITDA growth”.
Although the company has so far met IPO guidance, a number of factors have resulted in negative sentiment, Barclays said, namely the departure of the chief marketing/product officer and the chief digital officer.
Also denting sentiment have been the absence of an EPS ‘beat and raise’ narrative, which had been expected by many investors after the IPO; concerns over industry-wide issues relating to supply chain disruption; and Covid-related trading restrictions, which may return with the Omicron variant.
“These factors have contributed to a significant de-rating in recent months,” the bank said.
“However, we continue to like the exposure to a strong brand and we believe the company still has the ability to grow via significant headroom in many geographies, conversion of markets, rationalising wholesale, and improving the DTC mix.”
Barclays said the de-rating is an opportunity for investors to build a position.
At 1405 GMT, the shares were up 2.9% at 411.20p.