BOOT - Boot Barn defended by analysts despite earnings disappointment

2023-05-18 12:04:18 ET

Boot Barn ( NYSE: BOOT ) bulls remain confident in the long-term prospects for the stock despite a sharp post-earnings drop on Thursday.

Shares of the California-based western wear retailer fell over 12% during Thursday’s trading after posting a soft sales report for its fiscal fourth quarter and highlighting a 5.5% decrease in same store sales year over year. The company also provided light revenue guidance, forecasting between $1.69B and $1.723B against a $1.8B consensus expectation, and net income per diluted share of $4.70 to $5.00 against the $5.80 analyst estimate.

Nonetheless, bullish analysts advised clients to keep the faith.

For example, Piper Sandler called the factors pressuring the earnings report “transitory” and voiced continued belief in the long-term bull case. This is especially the case given normalizing inventory levels that could allow for an upside surprise in the quarters ahead, per the firm’s analysts.

“Promotions have returned to pre-pandemic norms with industry players remaining rational. Further, mgmt believes inventory is in good position despite being up +24% [year over year],” the team wrote. “All in, the company has ~30 weeks of supply on hand, below the previous few years before COVID.”

Similarly, Citi, Bank of America, and William Blair each voiced continued optimism on the stock despite soft near-term demand. While each firm cut price targets due to the surprisingly weak earnings print, all of the firms maintained Buy-equivalent rating.

“Given management’s style of guiding effectively based on trailing-three-month trends, we cannot be sure that guidance has been fully kitchen sinked, as guiding to current

trends on a downward slope can set up heartbreak (see fiscal 2023). However, underlying expectations at this point feel incrementally more appropriate, with easier comparisons in the back half,” William Blair analyst Dylan Carden wrote on Thursday. “More importantly, deceleration in the business does not represent a material deceleration in store volume, as bears would like to continue to believe.”

He added that there could be “upside to the initial mid- to high-teens operating margin targets” in the year as well.

The consensus sell-side rating on the stock remains a Strong Buy , though Seeking Alpha’s Quant team shifted to Hold in mid-2022 .

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