11:50 AM EDT, 07/01/2024 (MT Newswires) -- Birkenstock's ( BIRK ) is executing its direct-to-consumer expansion strategy better than expected, UBS Securities said Monday in a report.

The company is "ramping rapidly" in the Asia-Pacific region, and its average selling prices are "moving higher than previously thought, driven by a positive sales mix shift to DTC and successful intros of premium priced products in new categories," the report said.

UBS upgraded the footwear maker to buy from neutral and raised its price target to $85 from $52.

The investment firm increased Birkenstock's ( BIRK ) five-year EPS compound annual growth rate estimate to 25% from 21%, and the 2026 EPS estimate is now 10% above market expectations.

UBS said four "overhangs" on Birkenstock ( BIRK ) are gone, including speculation the company "would have a difficult time lapping the brand momentum created by last year's Barbie movie," and "little upside in its FY24 guidance" remained, UBS said.

Also, concerns emerged the "opening of new factories created execution risk," and "low stock liquidity would keep investors away," the note said.

"We now have much less concern around each of these issues," UBS said. Conversations with investors indicate the market doesn't fully agree the first two hurdles were cleared, the report said.

The market is also skeptical the Birkenstock brand will expand into new categories, like closed-toe shoes, UBS said.

Price: 54.70, Change: +0.29, Percent Change: +0.53