Daiwa Research lowered its target price for Xtep International (01368) to HK$5 from HK$5.4 and upgraded its rating to "outperform" from "hold" on valuations.
The research house said Xtep's stock price has fallen 35% from its peak this year with concerns over the deteriorating sales growth momentum in September, but Daiwa believes the market has overreacted and the current valuation level presents an attractive entry point for long-term investors to ride on the company's multi-brand strategy, despite the lack of near-term catalysts.
Daiwa raised its 2019-21 revenue forecasts by 6-12% but revised down its 2019-21 EPS estimates by 2-7%, factoring in the consolidation of K-Swiss/Palladium.
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