Clarus (CLAR) Stock Forecast & Price Target

Clarus Corp has transitioned to a cleaner story following the divestiture of its bullets/ammo business, resulting in a strengthened balance sheet that should enhance growth and margin improvement opportunities within its Outdoor and Adventure segments. The company has laid out ambitious multi-year growth targets, anticipating a consolidated CAGR of +4% in sales and +22% in adjusted EBITDA from 2022 to 2026, ultimately aiming for $375 million in sales and $49 million in adjusted EBITDA. Additionally, Clarus is positioned at approximately 6x EV-to-EBITDA, with a potential valuation increase aligned with higher-growth and well-regarded brand peers, contingent on successful execution of its operational and margin expansion plans.

Clarus Corp has reduced its 2024 adjusted EBITDA guidance by $4.5 million amid a challenging macroeconomic environment and a history of inconsistent execution under new leadership, raising concerns about the upcoming financial performance. The company's second-quarter results revealed disappointing sales across both the Outdoor and Adventure segments, with Outdoor revenue declining 10% year-over-year, primarily affected by weaker sales in the North America direct-to-consumer channel. Additionally, the potential for declining consumer traffic due to retail store closures and bankruptcies, combined with volatility in raw material costs, poses further risks to Clarus's profitability and growth outlook.