Analysts agree on the disruptive potential of the Allbirds Inc. brand, although JPMorgan says stiff competition from sports giants could be a damper for that momentum.
“Allbirds competes with highly established and large-scale players in the lifestyle apparel / footwear and athletic wear category, including Nike and Lululemon LULU,
(with Lululemon slated to launch shoes in 2022), ”analysts wrote in an initiation note released Monday.
“There is a threat from the big historical players such as Nike and Adidas investing heavily in similar capabilities of marketing natural and sustainable materials, noting that Allbirds does not retain material or design patents, which could have an impact on Allbirds’ competitive positioning, ”they wrote.
JPMorgan notes Allbirds BIRD,
action at neutral with a price target of $ 21.
Allbirds stock began trading on Nov. 3, going 63% above its initial IPO price of $ 15 when it debuted. The shares were trading at $ 19.03 on Monday.
The IPO of the Renaissance IPO ETF,
edged up 0.5% for the year to date while the benchmark S&P 500 SPX,
increased by 24.3% over the period.
Allbirds strives to be an eco-friendly option in the fashion world, with innovation in sustainable fabrics being at the heart of its business.
See: Allbirds IPO: 5 things to know about the new public green shoe company
Both Nike NKE,
and Adidas ADS,
have taken steps in more sustainable processes and goods. Nike launched a refurbished sneaker program earlier this year, for example. And Adidas has announced a partnership with resale company ThredUp Inc. TDUP,
in October and has already partnered with Allbirds for a 2022 launch.
Yet Allbirds’ focus on sustainability is seen by research groups as a growth engine for a business that starts out with low brand awareness.
“Allbirds is developing solutions in the areas of CO2 reduction and material innovation (non-synthetic) that are disrupting the smoothline industry, creating significant product differentiation and separation in our related rating metrics. to Truvalue ESG, ”Cowen analysts wrote in their introduction.
“According to our exclusive survey, at the time of purchase, 82% of consumers aged 18 to 34 consider the social impact and sustainability of a brand to be either very important (40%) or quite important (42%).
Cowen is pricing the Allbirds stock to outperform – the equivalent of a buy – with a price target of $ 24. Cowen also gives Allbirds an ESG score of 60 out of 100. A score of 50 represents neutral impact, according to the research group.
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Stifel is pricing Allbirds stock a buy with a target price of $ 25.
“Allbirds is a pioneer of sustainability, and the brand’s ethics align with the consumer
megatrends for conscious consumerism and insecurity, ”analysts said.
Allbirds’ direct-to-consumer (DTC) business model also gives the company an edge.
“Compared to more wholesale dependent competitors, the digital and retail DTC model supports both more product value for the consumer and more profit per unit for Allbirds,” Stifel said.
Morgan Stanley began hedging Allbirds with a stock rating and a price target of $ 23.
“With an assisted brand awareness of just 11% in the United States, we see an opportunity for its innovative and sustainable product development to capture market share in the global $ 1.8 trillion athletic footwear and apparel market. “the analysts said.
“Allbirds’ fully digitally driven retail distribution strategy has resulted in a deep understanding of their customer and 98% of sales at full price. “
KeyBanc Capital Markets has followed Allbirds since its inception and says the company’s origins in sustainability will be an asset for the future.
“Within the lifestyle brand space, we believe it will be particularly difficult to embrace this construction given the still dominant wholesale trend and the difficulty of developing and working with sustainable materials and performing, ”analysts said.
“We believe Allbird’s structure as a DTC brand gives it considerable latitude to embrace sustainability as a core product attribute across the product line. “