Jefferies indicated that a lack of near term catalysts and limited visibility on outdoor spending trends are reason enough to tread cautiously on Vista Outdoors ( NYSE: VSTO ) stock.
In an initiation note on Tuesday, a team of analysts led by Anna Glaessgen advised clients that the second half of 2022 should remain tough for outdoor retailers. As such, shares that seem “cheap” at first glance are likely appropriately priced.
While she said the company “deserves credit” for its spin-off of the firearms business and other “bold steps to improve shareholder value”, a weakening consumer and ballooning retail inventories have balanced out the upside management has helped to create.
“Actions such as improving the ammo mix (shift away from stockpiling / low margin segments) and the Remington acquisition (adds vol. w/o more industry capacity, eliminates a
historically promotional competitor) support stronger fundamentals vs. the prior trend,” Glaessgen noted. “However, such sustained improvement is unlikely to be fully underwritten by investors prior to VSTO establishing a firmer track record, especially given the degree of model recasting over this period.”
She assigned a $26 price target to shares alongside a “Hold” rating. Her rating is in line with the SeekingAlpha Quant rating , though it is well below the “Strong Buy” Wall Street consensus on the stock .
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Vista Outdoors garners cautious initiation from Jefferies