On Thursday, Telsey Advisory Group maintained its Outperform rating and $83.00 stock price target on Academy Sports & Outdoors Inc. (NASDAQ:ASO) despite a weaker-than-expected earnings report for the fourth quarter of 2023. The firm acknowledged that earnings for the quarter fell short and anticipates 2024 earnings to be below initial expectations.
The sequential improvement in comparable store sales (comp sales) from the third to the fourth quarter of 2023 was highlighted as a positive sign. Comp sales were down 3.6% in the fourth quarter compared to an 8.0% decline in the third quarter. Telsey pointed out the potential for Academy Sports to achieve flat or positive comp sales if the current trend persists, especially as year-over-year comparisons become more favorable.
The firm also noted Academy Sports' effective inventory management and controlled promotional activities. The company's gross margin is expected to remain stable or increase, which is a good indicator of financial health. Telsey is looking forward to the company's conference call at 10:00 AM ET for further insights into demand trends, promotional strategies, new store performances, and other financial metrics.
During the call, Telsey will be seeking more information on several key areas, including demand trends throughout the quarter, the level of promotional and clearance activity, and plans for 2024. Moreover, the performance of new stores and the schedule for opening new locations in 2024 will be of interest, as well as factors that are influencing the gross margin and the selling, general, and administrative (SG&A) expense ratio.
The composition of the inventory and merchandising initiatives will also be topics of interest during the call. Telsey has indicated that their estimates and 12-month price target for Academy Sports & Outdoors are subject to review following the detailed information to be provided on the call.
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