Wilson tennis racquets at the company's store in New York. A push to bring high-end athletic equipment to China’s increasingly wealthy middle class was part of the company’s pitch to investors in the IPO.

(Aug 19): Amer Sports Inc has been a disappointment for investors since going public earlier this year, with shares sliding roughly 9% since its February debut. That could change Tuesday, with Wall Street looking to its latest earnings to revive the stock.

The maker of Arc’teryx outdoor apparel and Wilson tennis racquets holds the ignominious record for the worst-performing shares by a company raising more than US$1 billion (RM4.43 billion) in a US initial public offering (IPO) since 2022, data compiled by Bloomberg show. Amer raised US$1.6 billion in its first-time share sale.

The decline has accelerated in recent weeks amid concerns over a slowdown in China. A push to bring high-end athletic equipment to China’s increasingly wealthy middle class was part of the company’s pitch to investors in the IPO. Even with existing investors including Anta Sports Products Ltd — China’s largest athletic-apparel producer — buying Amer shares to stopgap its entry to the New York Stock Exchange, the offering fetched a price below the marketed range.

Amer shares dropped after its first two earnings reports as a public company, but Wall Street is mostly optimistic heading into Tuesday’s results. Analysts anticipate that demand for its Arc’teryx brand — which they estimate derives roughly 40% of its sales from China — has remained strong even as consumer spending in the region has been lacklustre. Amer shares gained as much as 5.1% on Monday.

Alibaba Group Holding Ltd reported last week that its Chinese commerce business shrank for the first time in at least a year. However, competitor JD.com Inc posted stronger-than-expected revenue for its retail business.

Citigroup Inc’s Paul Lejuez expects Amer will top the Street’s sales and profit forecasts driven by robust Arc’teryx growth, and that it will boost its full-year projections for both metrics. He pointed to encouraging updates from Columbia Sportswear Co and North Face owner VF Corp, which suggest the active and outerwear markets in China remain healthy.

“We believe strong momentum in Arc continued in 2Q despite fears of a weakening global macro backdrop,” particularly in China, Lejuez wrote in a note earlier this month. In the nine months ended Sept 30, Greater China accounted for 19% of the company’s total revenue.

At BNP Paribas Exane, Laurent Vasilescu also anticipates Amer Sports will post a beat-and-raise quarter, though by a small degree. He highlighted that in addition to Columbia and North Face, Anta’s outdoor brands Descente and Kolon as well as Canada Goose Holdings Inc performed well in the midst of a challenging environment in China. Anta has a greater than 40% stake in Amer, data compiled by Bloomberg show.

Given persistent macroeconomic headwinds, UBS Group AG analyst Jay Sole expects Amer will maintain its annual profit projection. Still, he anticipates that 2Q results that meet Wall Street expectations and a reaffirmed annual outlook should cause the stock’s price-to-earnings ratio to expand given the bearish sentiment on shares, he said.

The options market is pricing in a 6.5% share move in the wake of Tuesday’s results, according to data compiled by Bloomberg.

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