Tough Season For Tractor Supply, But Credit Suisse Says Growth Story Intact

Tractor Supply Company TSCO preannounced disappointing Q2 results. The pressure on shares can be seen as “a buying opportunity,” since the results were impacted by seasonal factors and the 2H prospects are favorable, Credit Suisse’s Seth Sigman said in a report. He maintained an Overweight rating on the company, while reducing the price target from $100 to $96.

Although Tractor Supply reported its results significantly below expectations, comp transactions rose during the quarter, which is “a key differentiator of this story,” analyst Seth Sigman added. The EPS estimate for 2016 has been reduced from $3.48 to $3.38 to reflect the lower Q2 results.

From A Stock Perspective

Tractor Supply’s shares come under pressure due to the volatility in the company’s results in recent quarters. Sigman pointed out, however, that the volatility seemingly does not reflect the structural issues that are being faced by many other sectors. Rather, the results have been impacted by unfavorable seasonal trends, which have also impacted other retailers.

“With the near-term bar reset for TSCO, easier 2H comparisons, and the scarcity of high quality investment opportunities in retail, we believe a pullback could be the catalyst for investors to revisit the story,” the analyst wrote.