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Sportsman's Warehouse share price target cut to $4 on weak comps

EditorEmilio Ghigini
Published 04/04/2024, 05:08 AM

On Thursday, B.Riley adjusted its outlook on Sportsman's Warehouse (NASDAQ:SPWH), reducing the shares price target from $4.50 to $4.00, while maintaining a Neutral rating. The firm's decision comes after the company reported lower-than-expected comparable store sales, indicating that its customers are feeling the economic pinch.

The analysis observed that shoppers showed a preference for promotional items and generally avoided full-priced products, as well as a tendency to opt for lower and mid-level priced goods.

The company's recent performance highlights a challenging retail environment, with consumers increasingly driven by discounts. Despite these headwinds, B.Riley noted positive developments, such as potential market share gains in the firearms and ammunition categories following competitor exits. Additionally, there were promising signs in certain product segments, with improvements seen in the camping and fishing categories.

However, B.Riley remains cautious, citing ongoing concerns about persistent demand pressures that could impede the company's ability to improve margins in 2024 and potentially affect broader turnaround efforts. This cautious stance is reflected in the firm's decision to maintain a Neutral rating on Sportsman's Warehouse shares.

The outlook for Sportsman's Warehouse is mixed, with the firm recognizing both challenges and opportunities ahead. While there are areas of potential growth, particularly in the firearms and ammunition sectors, the overall retail landscape presents obstacles that may affect the company's performance and recovery.

InvestingPro Insights

In light of B.Riley's recent assessment of Sportsman's Warehouse (NASDAQ:SPWH), a deeper look into the company's financial health and market performance through InvestingPro data reveals additional layers to the story. With a market capitalization of 117.1 million USD, the company is operating under a significant debt burden and is not profitable over the last twelve months, as indicated by a negative P/E ratio of -12.60. This situation is compounded by a negative revenue growth rate of -9.72% over the last twelve months as of Q3 2024, reflecting the challenges in the retail sector that B.Riley pointed out.

InvestingPro Tips highlight that management at Sportsman's Warehouse has been actively buying back shares, but the company is quickly burning through cash. Moreover, analysts are not only revising their earnings downwards for the upcoming period but also anticipate a sales decline and a drop in net income for the current year. These concerns are mirrored in the stock's price, which has significantly fallen over the last year by 62.2%, underlining the cautious sentiment echoed by B.Riley.

For readers looking to delve further into Sportsman's Warehouse's financials and market projections, there are additional InvestingPro Tips available. These can provide a more comprehensive understanding of the company's position and outlook. To explore these insights and make informed decisions, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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