What Wall Street thinks about Allbirds and buying an ESG-branded
A woman walks past an Allbirds store in the Georgetown neighborhood of Washington, D.C., on Tuesday, Feb. 16, 2021.
Al Drago | Bloomberg | Getty Images
Allbirds has focused on its use of natural, environmentally friendly materials to set itself apart in the sneaker space from long-standing brands like Adidas, Nike and New Balance.
Putting ESG efforts at the core of its business has also caught the eye of Wall Street ahead of Allbirds reporting financial results for its first time as a public company after the market close on Tuesday.
Allbirds, which initially priced its 20.2 million shares at $15 to raise roughly $303 million in an offering early in November, saw a massive surge on its first day of trading, closing up nearly 91% at $28.64. However, the stock has slid since, declining more than 34% as of yesterday’s close.
But the growing appeal of sustainable companies to both investors and consumers has left many analysts bullish. More money has flowed into funds and stocks that have an ESG focus — $3 out of every $10 going into global equities is being directed into ESG, according to Bank of America. The environment was ranked as the most important political and social issue by teens in Fall 2021, according to the Piper Sandler “Taking Stock With Teens” survey, signaling potential Allbirds buyers in the future.
ESG as a differentiator
“Allbirds’ focus on sustainability will be a key differentiator both from a consumer and investor perspective,” Bank of America analysts wrote. “The uniqueness of sourcing sustainable materials (i.e. wool, tree, sugar cane) helps Allbirds stand out relative to peers and will likely continue to increase as consumers incorporate higher sustainability standards into products they buy. The other advantage is centered on the amount of investing dollars that continues to shift into ESG funds.”
BofA put a buy rating and a $23 price target on the stock.
Allbirds shares were trading under-$19 on Tuesday.
Piper Sandler noted that the company’s “strict commitment to sustainability is a key differentiator vs peers and will create tens of millions of loyal consumers over time.”
“To that end, BIRD plays into several structural investment themes including: consumers shifting towards a direct relationship with brands, an acceleration of casual & athletic product and increasingly relevant ESG conversation for consumers & investors alike,” Piper Sandler analysts wrote, placing a buy rating and a $26 price target on the stock.
Stifel analysts wrote that a proprietary survey of more than 11,000 consumers across six countries showed “broad market agreement” around the trend towards the “appreciation of sustainability” as well as the “casualization of fashion,” areas it says are in “the brand’s ethos.”
“Allbirds has uniquely aligned its brand and operations with megatrends that are likely to drive consumer spending for the foreseeable future,” Stifel analysts wrote. “The leadership position in bringing sustainable materials to market at…
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