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on monday, hibbet sports Telsey Advisory downgraded the stock (NASDAQ:) from Outperform to Market Perform and set a new price target of $74, up from $82. This adjustment reflects the company's cautious stance in anticipation of a difficult year ahead.
This downgrade stems from expectations that 2024 will be more difficult than originally expected, with comparable sales (profits) expected to be flat to slightly down and operating margins expected to contract. Masu. Previously, earnings growth and operating profit stabilization were expected.
The expected decline in sales is related to consumers remaining cautious and a lack of newness in the market. Additionally, operating margin contraction is expected to be driven by a combination of wage inflation, estimated at approximately 6% for store workers, continued investment in technology, and normalization of incentive compensation.
Despite the short-term challenges, the advisory firm notes that Hibbett Sports is well-positioned for the future, particularly for 2024 and beyond. The company's strategy to expand the number of retail stores in smaller markets with less competition could lead to higher operating margins if sales increase. Growth accelerates. The revised 12-month price target of $74 is based on a new 2025 EPS estimate of $9.25, adjusted downward from $10.20, and applying a price-to-earnings ratio of 8x.
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