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11 Mar 2021 | 10:36

Dr Martens rated 'equal weight' by Barclays, 'outperform' by RBC

(Sharecast News) - Barclays and Royal Bank of Canada were both positive about Dr Martens as they started coverage but Barclays was more cautious about the boot maker's valuation. Dr Martens is a popular brand with products loved by a broad range of consumers, Barclays said. Revenue and earnings have grown strongly over the past decade under private ownership and management has big ambitions, the bank added.

Barclays gave Dr Martens an 'equal weight' rating and a price target of 480p. The company's revenue and earnings prospects over the next three years justify a premium valuation but the shares have gained 27% since January's IPO.

Benchmarked against peers such as Canada Goose, Crocs and Deckers, Dr Martens' fair value is between 267p and 543p, Barclays said in a note to clients. With the shares at 456p at the time of publication that valuation looks on the high side, the bank said.

"We look for management to build a track record as a public company before arguing DOCS deserves to trade at the top of this range, Barclays said. "With FY21 results on 17 June, we see few near-term catalysts."

RBC initiated its coverage of Dr Martens, whose shoes have been worn by the Clash, the Specials and the Who, with an 'outperform' rating and a 550p price target. The brand represents "rebellious self-expression, a concept that is supported by cultural trends, RBC said. It sells lots of products direct to consumers, justifying high margins against its peers.

The group has opportunities to increase revenue in Asia Pacific, Europe, Middle East and Africa and the Americas, RBC said.

"DM has meaningful revenue growth prospects in the attractive branded footwear segment, and modest margin opportunity," RBC said. "We believe its strategic plan is tried and tested, underpinned by an established management team and strong brand momentum."

Dr Martens shares rose 0.8% to 459.8p at 12:47 GMT.



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