BofA Downgrades Hibbett On Lower Stimulus, Inventory Challenges

Hibbett Inc HIBB is likely to witness a decline in consumer demand from January, given the end of government stimulus payments and rising inflation, according to BofA Securities.

The Hibbett Analyst: Alexander Perry downgraded the rating for Hibbett from Buy to Neutral, while reducing the price target from $120 to $88.

The Hibbett Thesis: Inventory availability headwinds could “sequentially worsen” in the first half of fiscal 2023, given Nike Inc’s NKE supply chain challenges in Vietnam, Perry said in the note.

“A rising cost environment including freight & wages may pressure margins and could partially offset a more subdued promotional environment,” the analyst wrote.

“Spending on athletic footwear & apparel slowed to -5% y/y in F3Q according to BAC aggregated credit & debit card data, with tough comparisons the next 3 quarters given significant uplift from economic impact payments,” he added.

Perry said Hibbett’s market share gains could come under pressure due to “improved footwear allocations to Sporting Goods peers” like Dicks Sporting Goods DKS.

HIBB Price Action: Shares of Hibbett had had declined by 6.93% to $71.95 at the time of publication Thursday.

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