On Thursday, B.Riley reaffirmed its Buy rating and $65.00 price target for Academy Sports & Outdoors Inc. (NASDAQ:ASO). The firm's stance remains positive despite the company's fourth-quarter earnings for fiscal year 2023 falling short of expectations, primarily due to persistent sales challenges.
The guidance for 2024 also raised concerns, with projected comparable store sales (SSS) and earnings per share (EPS) not meeting analyst forecasts. The anticipated midpoint for comparable sales suggests a decline of 1.5%, marking another year of negative SSS performance.
The results from Academy Sports contrast with the more favorable reports from peers, such as Dick's Sporting Goods (NYSE:DKS). The underperformance is partly attributed to Academy Sports' lack of inventory in popular running brands like HOKA and On, which have contributed significantly to Dick's Sporting Goods' strong performance.
Additionally, Academy Sports is still experiencing the impact of the COVID-19 unwind, particularly in core categories that benefited during the peak of the pandemic. This is seen as a further disadvantage when compared to Dick's Sporting Goods, given Academy Sports' more substantial focus on hardgoods.
Despite these challenges, B.Riley sees a robust earnings growth potential for Academy Sports as the pressures from these categories diminish. The firm also notes the company's modest valuation, especially when compared to Dick's Sporting Goods. close the valuation gap with its competitor.
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