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Analysts are Split on Allbirds Ahead of Its First-Ever Earnings Report

Allbirds is set to report financial results for the first time ever as a public company.

Ahead of its announcement on Tuesday, analysts are split on their recommendations regarding the eco-friendly footwear company and are making recommendations on whether or not to buy shares of the company.

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Allbirds, the eco-friendly brand founded in 2015, made its market debut earlier this month. The company sold 20,192,307 shares of its Class A common stock at $15 per share and raised more than $300 million ahead of its market debut, beating initial expectations to raise $269 million for an IPO. Within hours of trading under the Nasdaq Global Select Market under the symbol BIRD, Allbirds stock was soaring above 60%.

Allbirds stock was down over 3% in the early afternoon on Monday ahead of its earnings report.

In recent notes, analysts from Stifel and Cowen maintained positive views on the potential for the brand, promoting “Buy” and “Outperform” ratings, respectively.

“Allbirds is a sustainability pioneer, and the brand ethos aligns with consumer megatrends for conscious consumerism and casualization,” wrote Stifel analyst Jim Duffy. “With just 11% brand awareness in the U.S. market, we see the brand early in development. Also, compelling digital trends and retail economics suggest a long runway for 20% or better growth.”

In a similarly positive note, Cowen analyst John Kernan said that Allbirds can likely hit $1 billion in sales with benefits from its ESG leadership, materials innovation, and brand power.

“The shift to store growth and omni-channel capabilities will expand brand awareness and preference,” Kernan wrote.

Meanwhile, other analysts are less confident about the brand that has become notable in recent years for its focus using sustainably sourced materials, such as tree fiber, sugarcane and crab shells.

For example, JP Morgan and Morgan Stanley took a more cautious approach with their initial recommendations in their coverage.

Morgan Stanley said in a note that Allbirds’ “path to profitability is less clear and requires a large inflection in performance,” despite being a distinctive brand focused on ESG. Morgan Stanley analysts also pointed out that Allbirds will need to expand its product lines and widen its audience to hit growth targets.

Allbirds launched its sustainable activewear collection in September, and last month it unveiled its first off-road shoe, the Trail Runner SWT, featuring FSC-certified natural rubber outsoles and SweetFoam midsoles made from sugarcane.

“In Allbirds’ current state, one could argue it appears a single product company with a narrow customer base that disproportionately skews wealthier and older,” Morgan Stanley analysts wrote. “This initial focus on lifestyle, lack of style diversity in its product lines, and narrow customer base stand out compared to leading global footwear players.”

JPMorgan also expressed hesitation in its Neutral rating for Allbirds, with a price target of $21.

Allbirds is among multiple shoe brands and retail companies that have gone public this year. In August, athletic brand On filed for an IPO — the same month as Allbirds — and made its market debut in September. Authentic Brands Group, which owns various footwear brands including Nine West, Frye, Eddie Bauer, Tretorn and more, filed for an IPO in July, but has since delayed the process after receiving a new hefty investment.