Allbirds Shares Plunge 15% on Light Outlook, Shares 'Undervalued' Says Analyst

© Reuters. Allbirds (BIRD) Shares Plunge 15% on Light Outlook, Shares 'Undervalued' Says Analyst

Allbirds (NASDAQ:BIRD) shares are down more than 14% in premarket trading Wednesday after the company trimmed its FY revenue guidance and said it expects a wider adjusted EBITDA loss.

Allbirds reported Q1 net revenue of $62.8 million, slightly above the consensus estimates of $62.2 million. Adjusted EBITDA loss stood at $12.2 million, topping the analyst consensus of $11.2 million.

For the full fiscal year, BIRD expects net revenue in the range of $335 million to $345 million, compared to its previous forecast of $355 million to $365 million, while analysts were looking for $362.4 million.

The company expects FY adjusted EBITDA loss of between $21 million and $25 million, up from its previous forecast range of $9 million loss to $13 million loss, and compared to the estimated loss of $10.9 million.

“We anticipate that external headwinds will continue to impact our international business and as such, we are reflecting a more cautious outlook in our updated 2022 guidance targets,” CFO Mike Bufano said.

Allbirds said Russia’s invasion of Ukraine and lockdowns in China weighed on the company’s international business operations in the first quarter. The company’s management said it expects these challenges to remain throughout 2022.

Stifel analyst Jim Duffy maintained a Buy rating but cut the price target to $7.00 per share from the prior $20.00.

“We acknowledge external challenges (Ukraine, China COVID restrictions, FX, supply chain, etc.) and are encouraged by attention to expense management but business momentum is underwhelming relative to expectations. In the context of both the external disruptions and the rerating of the valuation, we believe the current share price undervalues the business, franchise, and asset including sustainable materials intellectual property. Additionally, we see opportunity within the P&L to defend against cash consumption and value destruction,” Duffy said in a note.

Telsey Advisory Group analyst Dana Telsey said BIRD delivered “solid” results. The analyst also cut the price target to $9.00 per share, down from $11.00.

“We believe Allbirds' business is on solid footing in the US and the company continues to benefit from increasing brand awareness, new store openings, and good reception to product launches. However, investors remain concerned around the health of the US consumer given inflationary pressures and supply chain challenges. As such, Allbirds' softer 2Q22 outlook and downward revision to the 2022 guidance are likely to pressure the stock in the near-term. Looking further out, we continue to view Allbirds as a lifestyle footwear and apparel brand that is in the early phases of robust, multi-year growth, as a result of the company bringing a new proposition to consumers through its focus on simple designs and sustainable materials,” Telsey told clients.

By Senad Karaahmetovic