American Outdoor Brands Shares Soar, Analyst Turns Bullish: What Are The Catalysts?

American Outdoor Brands Inc’s AOUT stock does not adequately reflect the company’s strong brand portfolio in a healthy outdoor participation environment, according to B. Riley Securities.

The American Outdoor Brands Analyst: Eric Wold upgraded the rating for American Outdoor Brands from Neutral to Buy, while keeping the price target unchanged at $11.

The American Outdoor Brands Thesis: The rating change reflects expectations for healthy retail inventory levels to drive “normalized re-stocking patterns into the holiday season,” rather than the quarterly results, scheduled to be reported on Thursday, Wold said in the upgrade note.

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“With AOUT shares declining ~22% since our downgrade vs. a gain of 13% for the Russell 2000, we also not only believe the perceived risk inherent in our downgrade has now been priced into shares, but that the current valuation does not reflect the opportunity ahead with an elevated outdoor activity participant base and a brand portfolio that may be attractive to other entities,” the analyst wrote.

He added American Outdoor Brands could become “an orphan spin-off that could achieve greater profitability within another entity that has an even broader reach into the retail channel and with consumers directly.”

AOUT Price Action: Shares of American Outdoor Brands had climbed 18.60% to $9.22 at the time of publication Tuesday.