Investing.com -- Investment bank Stifel cut its rating on Puma SE (ETR: PUMG ) stock to Hold from Buy to reflect a series of setbacks that have raised concerns about the company’s control over its operations and the desirability of its brand.

The downgrade comes after Puma shares fell 20% on Wednesday following disappointing quarterly and annual forecasts. The company also announced fresh job cuts and warned of uncertain U.S. consumer demand.

The stock price decline marks a second major reversal in roughly two months.

“Two major consecutive setbacks in January and March 2025 lead to massive earnings revisions within a very short time frame, raising doubts on the level of control over operations and brand desirability,” Stifel analysts said in a note.

During the earnings call, Puma’s management provided insights into their strategy and the assumptions underlying their short and midterm financial guidance.

Stifel’s analysis suggests that while Puma’s fiscal year 2025 (FY25) guidance appears cautious and achievable, doubts remain about the company’s ability to hit an 8.5% EBIT margin by 2027, which would surpass the record 8.2% margin of 2021.

“Our new forecasts stand below the 2027 guidance as this midterm target embeds some degree of wishful thinking, we believe,” analysts said.

Puma has adjusted its 2025 expectations twice already this year, with the latest EBIT guidance set between €425 million and €525 million.

The first quarter of 2025 is projected to be weak, with management anticipating a low single-digit decline in the top line and an EBIT of €70 million before one-offs, compared to €159 million in the first quarter of 2024.

For the remainder of the year, Puma aims for a gradual sales recovery and benefits from its NextLevel restructuring plan. Stifel forecasts a 2025 EBIT of €475 million, slightly below the mid-range of Puma’s guidance, with an EBIT margin of 5.3%, down from 7.1% in FY24.

Looking ahead to 2027, achieving the targeted 8.5% EBIT margin would require a significant acceleration in sales growth and improved market conditions in the US and Greater China.

However, Stifel remains skeptical, estimating a 6.8% EBIT margin for FY27 based on mid-single-digit top-line growth for 2026-27. “We lack visibility on the success of the company’s brand elevation strategy which is core to reach this goal,” the firm noted.

Alongside the downgrade, Stifel also nearly halved its price target on Puma stock to €25 from €43.