Bullish indicating open at $55-$60, IPO prices at $37
TD Cowen raised its price target on Academy Sports & Outdoors Inc. (NASDAQ:ASO) to $48.00 from $44.00 on Wednesday, while maintaining a Hold rating on the sporting goods retailer.
The price target increase comes despite Academy Sports missing first-quarter estimates due to slightly lower same-store sales and higher-than-expected selling, general, and administrative expenses.
TD Cowen noted that Academy Sports’ gross margin rate remains healthy, with management continuing to forecast gross margin expansion in the second half of the year, even when considering worst-case tariff scenarios.
The firm pointed to Academy Sports’ free cash flow as supporting its valuation, with a projected free cash flow yield of 11.6% for fiscal year 2026. May comparable sales were negative, however, and the company faces implied acceleration in second-half margin run rates.
TD Cowen expressed concerns about brick-and-mortar store productivity levels, noting that sales per square foot are approaching first-quarter 2020 levels while the company has added 44 new stores since 2022.
In other recent news, Academy Sports & Outdoors reported its Q1 2025 earnings, revealing an adjusted EPS of $0.76, which missed the forecasted $0.8983. The company also reported revenue of $1.35 billion, slightly below the expected $1.37 billion, marking a 0.9% decrease year-over-year. Despite the earnings miss, Academy Sports opened five new stores, expanding its footprint to 303 locations, and saw a 10% increase in e-commerce sales. Truist Securities raised its price target for Academy Sports to $47.00 from $45.00, maintaining a Hold rating, noting the positive performance of the company’s expanded Nike (NYSE:NKE) and new Jordan product assortment. However, Truist observed a decline in overall store traffic by mid-single digits in the first quarter. UBS maintained a Neutral rating on Academy Sports with a $48.00 price target, expressing concerns over the company’s ongoing challenges and the lack of evidence for a turnaround in performance. UBS highlighted the need for Academy Sports to stabilize its market share and achieve positive comparable sales for a shift in market sentiment. These developments reflect the mixed outlook from analysts and the challenges facing Academy Sports in the current retail environment.
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