RBC Capital cuts Dr Martens price target after profit warning

22nd Apr 2024 07:34

(Sharecast News) - RBC Capital Markets cut its price target on Dr Martens on Monday to 65p from 85p as it reduced estimates following the bootmaker's FY25 guidance.

The bank said that despite the recent sell-off in the shares, it reckons it's too early to turn more positive on Dr Martens, given the stock remains in a "vicious" earnings downgrade cycle following its fifth profit warning.

"New CEO/CFO will likely undertake a detailed review of the business in the next 6-12 months, and above all else, drastic change is required, starting with financial discipline," it said.

"It is difficult to quantify a steady-state margin for DOCS at this stage and which may require right sizing its cost base."

The bank, which maintained its 'sector perform' rating on the shares, said it was reducing its FY25 EBIT estimate by 45%, its revenue forecast by 9% and its EPS forecast by 58%.