JPMorgan Maintains Overweight Stance on XTEP INT'L Despite Price Target Reduction

Deep News07-21 23:10

JPMorgan has issued a research report, adjusting its outlook for XTEP INT'L (01368) in response to a weak retail climate. The firm has reduced its profit forecasts for the years 2026 through 2028 by 3% to 5% and has lowered its target price from HK$6.3 to HK$6. However, it reaffirms its "Overweight" rating, maintaining a positive view on the company's earnings growth potential.

The second-quarter 2026 operational data for XTEP showed weakness. Retail sales for the core XTEP brand experienced a mid-single-digit percentage decline year-over-year, while the Saucony brand recorded a low single-digit percentage increase. This performance was at the lower end of market expectations, primarily attributed to a challenging macroeconomic backdrop, unfavorable weather impacting foot traffic at street-level stores, and Saucony's implementation of strict discount controls in its online channels. Management has upheld its guidance for a high single-digit net profit margin in 2026 but is currently reviewing its revenue targets.

Despite the near-term headwinds, the report expresses encouragement regarding Saucony's push towards premiumization—encompassing channel upgrades, brand value enhancement, and product line expansion—as well as the core XTEP brand's efforts to further strengthen its mindshare within the running category.

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