Dr Martens PLC (LSE:DOCS) shares could drop by more than 13% as it struggles to return to significant revenue growth and make an impact in the US, analysts believe.
Deutsche Bank analysts initiated their coverage of the British shoemaker by rating the stock a “hold” and issuing a target share price of 65p.
Shares in Dr Martens opened trading on Monday at around 75p, having lost more than half its value in the last twelve months.
Experts at the German bank reckon much of the group’s woes have been led by “execution issues and a change in investment” which resulted in “sharp earnings declines”.
Earlier this month, the group issued a profit warning after it said US wholesale challenges and cost inflation had eaten away at its sales growth.
Dr Martens expects a single-digit percentage decline in revenue with a worst-case scenario of PBT being one-third of financial year 2024 levels.
Now, Deutsche Bank believes it is vital for margins to stabilise and US growth to occur if it wants to stimulate its share price.
“We see headroom for growth in global penetration – but hurdles in terms of reigniting US interest in boots and rebuilding partner confidence are no small ask for new management,” the bank added.
Analysts also noted that operating expenditure is now 1.9 times larger than when it was listed in 2021 despite revenues only being 1.25 times greater.