Loop Capital raises Academy Sports & Outdoors stock price target to $65

Academy Sports & Outdoors (ASO) reported Q1 2025 adjusted EPS of $0.76 and revenue of $1.35 billion, both missing analyst forecasts, alongside a 3.7% decline in comparable sales. Despite these misses, the company saw 10% e-commerce growth and opened five new stores. Analyst sentiment is mixed, with Loop Capital raising its price target to $65 and maintaining a Buy rating, anticipating a significant revaluation upon a positive comparable sales inflection in fiscal year 2025, while TD Cowen, UBS, and Truist maintained more cautious ratings and lower price targets, citing ongoing challenges and tariff concerns.

Analysis

Academy Sports & Outdoors (ASO) presents a conflicting investment profile, marked by recent underperformance against a backdrop of forward-looking analyst optimism. The company's first-quarter 2025 results missed consensus, with an adjusted EPS of $0.76 versus a $0.8983 forecast and revenue of $1.35 billion falling short of the expected $1.37 billion. This performance was driven by significant operational headwinds, including a 3.7% decline in comparable sales and a mid-single-digit drop in store traffic. Despite these challenges, the company demonstrated strength in its digital channel with a 10% increase in e-commerce sales and continued its physical expansion by opening five new stores. Analyst sentiment is notably divided. Loop Capital remains highly bullish, raising its price target to $65 and reiterating a Buy rating, predicated on the belief that a positive comparable sales inflection in fiscal 2025 will unlock a significant revaluation, using DICK’S Sporting Goods as a valuation benchmark. Conversely, other firms like TD Cowen, UBS, and Truist Securities express more caution, issuing Hold or Neutral ratings with lower price targets ($47-$48), citing the ongoing performance challenges and external risks such as potential tariffs.

Key Decisions for Investors

• Investors should weigh the near-term risk highlighted by the Q1 earnings miss and the 3.7% decline in comparable sales against the long-term bull case presented by Loop Capital.
• The key catalyst to monitor is a stabilization or positive inflection in comparable sales, which analysts expect in fiscal 2025 and view as critical for a stock revaluation.
• Consider the company's growth drivers, such as its 10% e-commerce growth and new store openings, as potential offsets to current declines in store traffic.
• Factor in external risks, particularly the potential impact of tariffs mentioned by analysts, which could add pressure to margins and the company's value proposition.