On Tuesday, Jefferies adjusted its price target on shares of Academy Sports & Outdoors Inc. (NASDAQ:ASO), bringing it down to $68 from the previous $81, while retaining a Buy rating on the stock. The firm noted that despite low investor expectations ahead of the company's recent earnings report, a 5.7% comparable store sales decline marked a weaker than expected start to the year 2024.
The company has not altered the assumptions underpinning its annual guidance, leading investors to anticipate a potential reduction in the second quarter forecast. Jefferies' decision to maintain a Buy rating is based on several factors. These include Academy Sports & Outdoors' efforts to expand product novelty with current vendors and promotions that are already factored into the gross margin percentage guidance.
The firm's stance reflects a belief in the company's strategic initiatives and an assessment that investor expectations have reached a low point. This perspective suggests Jefferies sees a potential upside for the stock, despite the near-term challenges reflected in the revised price target.
Academy Sports & Outdoors has faced headwinds at the beginning of 2024, as indicated by the performance metrics, but Jefferies appears to be looking beyond immediate market reactions. The firm's analysis points to underlying strengths in the company's business model and market strategy that could drive future performance.
The new stock price target of $68 represents a recalibration of expectations in light of recent developments, yet the continued endorsement of a Buy rating indicates a confidence in the company's long-term prospects despite the recent dip in comparable store sales.
In other recent news, Academy Sports + Outdoors has partnered with DoorDash (NASDAQ:DASH) to provide on-demand delivery services, aiming to enhance the shopping experience during the busy Back-to-School season. This partnership promises to deliver items such as apparel, footwear, sporting goods, and outdoor recreation equipment on the same day.
In recent financial developments, Academy Sports reported a slight increase in sales for its fourth quarter, reaching $1.8 billion, despite a 3.6% decrease in comparable store sales. The company anticipates net sales between $6.07 billion and $6.35 billion for fiscal 2024, with comparable sales growth ranging from negative 4% to positive 1%.
In analyst news, Truist Securities adjusted its outlook on Academy Sports, reducing the price target to $73.00 from the previous $75.00, while maintaining a Buy rating. Jefferies initiated coverage on Academy Sports, issuing a Buy rating and setting a price target of $85.00. B.Riley increased the share price target from $65.00 to $72.00, maintaining a Buy rating, due to improved trends in the Outdoor segment.
Conversely, TD (TSX:TD) Cowen reduced its share price target to $82 from $86, but maintained an Outperform rating, expressing optimism about the company's same-store sales growth and earnings before interest and taxes margin trends. These are some of the recent developments in the ongoing story of Academy Sports + Outdoors.
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