Piper Sandler maintains Tractor Supply stock at $65 target

On Tuesday, Piper Sandler affirmed its positive stance on Tractor Supply Company (NASDAQ:TSCO), reiterating an Overweight rating with a consistent price target of $65.00. This aligns with broader market sentiment, as InvestingPro data shows 11 analysts have recently revised their earnings estimates upward. The firm’s analyst highlighted Tractor Supply’s potential to outperform in the first half of the year, citing specific factors that could drive sales beyond expectations. With a market capitalization of $29.29 billion and a solid financial health score rated as "GOOD" by InvestingPro, the company appears well-positioned for growth.

Tractor Supply is anticipated to benefit from robust demand for backyard chickens, which is expected to contribute a 1%-1.5% increase to sales in the first and second quarters. This projection is not only based on competitive insights but also on survey results related to the 2023 bird flu, which indicate a significant sales boost for the first half of the year. The company’s existing customer base, of which 20% own backyard chickens, along with the potential for attracting new customers, positions Tractor Supply favorably in the current economic climate. InvestingPro analysis reveals the company has maintained strong financial metrics, with a revenue growth forecast of 6% for FY2025 and 15 consecutive years of dividend increases.

Additionally, the analyst pointed to the upcoming warmer weather in regions where Tractor Supply operates as another catalyst for sales growth in the first quarter. The current year-over-year weather conditions are expected to positively impact the company’s performance in the near term.

Tractor Supply’s guidance for 2025, which forecasts a 1%-3% comparable store sales growth, does not seem to account for the anticipated increase in backyard chicken demand. Consequently, the first and second quarter comparable sales estimates of 1.3% and 2%, respectively, appear to be conservative and potentially surpassable given the outlined factors.

The company’s positioning is notably distinct within the Hardlines & Broadlines sector, where consumer spending risks are generally trending downwards. Tractor Supply’s unique market niche and the upcoming seasonal changes provide a strong basis for the analyst’s optimism regarding the company’s near-term sales trajectory.

In other recent news, Tractor Supply Company reported its fourth-quarter earnings for 2024, which fell slightly short of expectations. The company posted an earnings per share (EPS) of $0.44, just under the anticipated $0.45, while revenue came in at $3.77 billion, missing the forecast of $3.79 billion. Despite these minor shortfalls, Tractor Supply announced a 4.5% increase in its quarterly cash dividend, bringing it to $0.23 per share, and expanded its stock buyback program by $1 billion, raising the total authorization to $7.5 billion. Analysts from DA Davidson reaffirmed their Buy rating for the company, maintaining a $65 price target, highlighting Tractor Supply’s modest product advantage over Amazon (NASDAQ:AMZN). The company also opened 80 new stores and 11 Petsense locations, contributing to a 3.1% increase in net sales for the quarter. Digital sales played a significant role, generating over $1.1 billion. Looking forward, Tractor Supply projects net sales growth of 5-7% for 2025, with plans to open approximately 90 new Tractor Supply stores and 10 Petsense locations.

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