Academy Sports & Outdoors (NASDAQ:ASO) Receives Buy Rating from Guggenheim as Price Target Jumps to $75
Guggenheim has reaffirmed its Buy rating on Academy Sports & Outdoors Inc. (NASDAQ:ASO) and has boosted the price target to $75 from $68. The stock of Academy Sports has experienced a remarkable surge of about 52% in the past three months, surpassing the broader market’s gain of approximately 15% over the same period. This upswing can be attributed to the heightened expectations of an improving consumer spending environment.
Although the stock has performed exceptionally well, Guggenheim believes that Academy Sports has even higher near-term growth rates and a lower valuation compared to its peers. This is mainly due to the company’s aggressive expansion strategy, which includes plans for an 8-9% increase in unit expansion as it ventures into new and adjacent markets.
However, there are some concerns about potential setbacks, as Academy Sports has recorded a year-to-date decline of 7.5% in comparable sales and a 300 basis point erosion in EBITDA margin. Despite these worries, Guggenheim contends that the current concerns are already reflected in Academy Sports’ modest EBITDA and P/E multiples.
Expressing confidence in the company’s valuation, Guggenheim has raised its price target to $75. Analysts suggest that while the fourth-quarter operating results and initial 2024 guidance may not act as immediate catalysts for the stock, the potential stabilization of the profit and loss statement in the first half of the year could have a positive impact in the coming months.
Guggenheim’s updated price target of $75 reflects a positive outlook on Academy Sports & Outdoors’ growth prospects and market expansion, despite the current fiscal challenges. The firm remains optimistic about the stock, expecting further stabilization and potential upside in the near future.
Analyst comment
Positive news.
As an analyst, I expect the market for Academy Sports & Outdoors (NASDAQ:ASO) to continue to perform well. With a reaffirmed Buy rating and a higher price target of $75 from Guggenheim, the stock has the potential for further upside. Despite some concerns about declining sales and margin erosion, Guggenheim believes these challenges are already priced in, and the company’s aggressive expansion strategy and positive consumer spending environment should drive growth in the near term.
