Truist Securities analyst Joseph Civello reiterated a Buy rating on the shares of Academy Sports and Outdoors Inc ASO and lowered the price target from $77 to $75.
The company reported fourth-quarter FY23 sales growth of 2.8% year-on-year to $1.794 billion, missing the analyst consensus estimate of $1.796 billion. Adjusted EPS of $2.21 missed the estimate of $2.30.
While fourth-quarter demand was elevated around the holidays, customers remain financially stressed, and early first-quarter 2024 appears soft, said the analyst.
The analyst believes the FY comp guidance of down (4%) to +1%, being the first FY guidance provided by the new CEO/CFO, the outlook could prove fairly conservative.
Though Outdoor category comparable sales growth of 6.3% wasn't enough to offset softness in other categories, the analyst is encouraged about the segment inflecting positively against soft comparisons.
As per the analyst, the guidance for FY gross margin of 34.3%-34.7% is conservative due to potential fixed cost leverage on higher sales and easing promotional pressures.
New stores are expected to reach similar maturity as the existing fleet but at a slower pace, the analyst noted.
In addition to broad pressure on consumers, the company has faced greater sales declines as the industry continues to digest the massive surge in demand it experienced earlier in the pandemic, noted the analyst.
Price Action: ASO shares are trading lower by 1.32% at $63.58 on the last check Friday.
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