Academy Sports and Outdoors: Hold Rating Amidst Macroeconomic Challenges and Performance Concerns

Analyst Simeon Gutman of Morgan Stanley maintained a Hold rating on Academy Sports and Outdoors (ASO – Research Report), reducing the price target to $52.00.

Simeon Gutman has given his Hold rating due to a combination of factors influencing Academy Sports and Outdoors’ current financial standing and future outlook. The company’s valuation appears relatively low at approximately 7.6 times the next twelve months’ price-to-earnings ratio, and it maintains a clean balance sheet with strong cash generation. However, the ongoing macroeconomic challenges and the 13th consecutive quarter of negative comparable sales weigh heavily on its performance.
Despite a modest improvement in gross margins, the company missed expectations on comparable sales and faced higher than anticipated selling, general, and administrative expenses, which pressured its operating income. The future performance of ASO hinges on its ability to reignite customer interest to achieve positive comparable sales, maintain gross margins amidst market share losses and tariff challenges, and normalize its SG&A spending after significant investments. These factors contribute to a balanced risk/reward scenario, justifying the Hold rating while awaiting a more definitive turnaround.

In another report released yesterday, Bank of America Securities also reiterated a Hold rating on the stock with a $55.00 price target.

ASO’s price has also changed moderately for the past six months – from $52.580 to $44.600, which is a -15.18% drop .