On Tuesday, Jefferies adjusted its outlook for Academy Sports & Outdoors Inc. (NASDAQ: ASO), reducing the price target to $64 from $68, while reiterating a Buy rating on the stock. The firm's reassessment followed Academy Sports' second-quarter performance, which saw the company miss its comparable store sales expectations and lower its forecast for the full year.
Despite the second-quarter shortfall and a cut in the full-year guidance, the company's shares experienced a mid-single-digit percentage increase. This uptick reflects investor adjustments to their 2024 earnings expectations.
Jefferies noted that the positive comparable sales in August were fueled by a shorter back-to-school shopping season. Additionally, the firm observed strength in adult and outdoor categories, which bolstered management's confidence in a widespread recovery during the second half of the year.
The investment firm pointed out that Academy Sports' stock currently trades at a low multiple and that investor expectations are modest. This context, combined with the company's revised and attainable full-year guidance, makes the shares an attractive investment opportunity, according to Jefferies.
The analyst's commentary highlighted the compressed back-to-school season as a key driver of the positive August sales. The analyst believes that this, along with the company's performance in key product categories, positions Academy Sports for a potential rebound in the latter half of the year.
Jefferies concluded that despite the recent challenges, Academy Sports & Outdoors Inc. presents a compelling buy opportunity. The firm's maintained Buy rating reflects a positive outlook on the stock's future performance, taking into account the updated financial guidance for the fiscal year.
In other recent news, Academy Sports & Outdoors has been the focus of several analyst reports. Despite facing Q2 challenges such as consumer pressures and hurricane disruptions, B.Riley maintained a Buy rating on the company with a $70 target.
This optimism is attributed to a positive sales inflection in August across various categories and the company's gross margin resilience. TD Cowen also raised the company's price target to $56, maintaining a Hold rating, while Loop Capital held its Buy rating and $77 price target.
Academy Sports & Outdoors reported a 2.2% decrease in second-quarter sales, totaling $1.55 billion, leading to a downward revision of the year-to-date outlook for both revenue and earnings. However, Truist Securities and Evercore ISI adjusted their price targets to $63 and $65 respectively, both maintaining positive ratings. Conversely, JPMorgan (NYSE:JPM) reduced its price target to $52, keeping a neutral rating.
The company has plans to open between 160 to 180 new stores over the next five years and enhance its online presence with initiatives like the My Academy Rewards program and same-day delivery via DoorDash (NASDAQ:DASH).
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