BofA Securities upgraded At Home Group Inc HOME from Underperform to Buy and raised price target from $5 to $16.
Analyst Curtis Nagle said there is sustainability in home-related trends and listed the following as reasons for the upgrade:
- At Home is going beyond industry sales expectations
- Leverage will be lower after the second quarter
- At Home’s valuation is more attractive with the new estimates in store
- At Home reported Q2 results with an EBITDA that slightly topped the earnings from FY19
“We believe a higher multiple is warranted on higher confidence on sales/ EPS growth through the next 2-3yrs,” the analyst said.
Nagle named the following investment takeaways on the stock:
- People are spending more towards their homes and away from travel and entertainment.
- At Home stores are staying stable, even in states with high virus counts.
- Lastly, At Home is using cash made in the second quarter to pay off $228 million in short-term debt.
BofA raised its 2021 EPS estimate from 8 cents to $1.43.
HOME Price Action: The stock was down 2.78% at $12.25 at last check Friday.
Public domain photo via Wikimedia.
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