Why This American Outdoor Brands Analyst Is Bullish

American Outdoor Brands Inc AOUT was born out of a spinoff from gun company Smith & Wesson Brands Inc SWBI and is well-positioned to benefit from "the impressive rugged outdoor" category, according to B. Riley Securities.

The American Outdoor Brands Analyst: Eric Wold initiated coverage of American Outdoor Brands' stock with a Buy rating and $32 price target.

The American Outdoor Brands Thesis: The bullish case for American Outdoor Brands is based on six catalysts, Wold wrote in the initiation note. These include:

1. American Outdoor sells a diversified portfolio of outdoor industries, including hunting, shooting, fishing and hiking. The complementary product lines give the company an opportunity to cross-target multiple groups and generate new sales across the outdoor activity spectrum.

2. The total addressable market of outdoor participants increased "well beyond" expectations during the pandemic and market growth can prove to be sustainable over the longer-term.

3. Management's "Dock and Unlock" development strategy, in which a single niche product can expand into a more encompassing brand, could generate multiple sale opportunities.

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4. The percentage of online sales rose from 22% of all sales in 2018 to an estimated 39% in the first half of 2021. The online channel emphasizes customer engagement, cross-selling opportunities and offers superior margins.

5. American Outdoor closed eight acquisitions from 2014 to 2019 that expanded its exposure to outdoor activities. Additional tuck-in acquisitions over the coming years should be expected to further drive value.

6. Current street analysts aren't fully appreciating the company's potential growth rates amid greater industry participation and growing market share.

AOUT Price Action: Shares of American Outdoor Brands were trading 2.30% higher at $20.67 at publication Thursday.

(Photo by Toomas Tartes on Unsplash)