Broker Peel Hunt initiated coverage of Dr Martens on Wednesday with a ‘hold’ rating and 475p price target, as it said the company embodies everything it looks for in a brand.
“Dr Martens is in our sweet spot of compelling consumer brands with a defined unique selling points, attractive return on capital employed strong cash generation and good runway for growth,” Peel said.
“DM generates attractive underlying margins (c27% EBITDA), resulting in strong levels of cash conversion.”
The broker added that DM has a well-established international platform, with good prospects, underpinning mid-teens earnings per share growth and a yield.
Peel said it would be a buyer of the shares on weakness, but at around 32x price-to-earnings ratio, a lot of the positives are already priced in, hence the initiation at ‘hold’.
