Robert Ohmes, an analyst from Bank of America Securities, reiterated the Sell rating on Tractor Supply (TSCO – Research Report). The associated price target is $53.00.
Robert Ohmes has given his Sell rating due to a combination of factors affecting Tractor Supply’s performance. The company’s first-quarter results showed a decline in comparable sales by 0.9%, with average ticket sales under pressure from deflation. Although there was a 2.1% increase in traffic, it was not enough to counteract the 2.9% decline in ticket sales, which was influenced by modest deflationary pressures. Additionally, while there was strength in certain product categories like CUE and winter seasonal merchandise, this was offset by weaker sales in spring seasonal products.
Ohmes also noted that despite Tractor Supply’s efforts to manage product costs and execute its everyday low price strategy, the company’s operating expenses as a percentage of sales increased due to growth investments and fixed cost deleverage. Looking forward, although there is an expectation for improving sales trends as deflation moderates, near-term pressures such as macroeconomic uncertainty and challenges in discretionary and big-ticket items remain significant concerns. These factors, combined with strategic investments and changes in sourcing, contribute to the cautious outlook and the reiteration of the Underperform rating.
TSCO’s price has also changed dramatically for the past six months – from $274.290 to $49.000, which is a -82.14% drop .