Analysts Like Cabelas Despite Recent Disappointments

Cabelas Inc CAB got a thumbs up from several analysts Friday, despite the retailer's tough sledding of the past year, during which shares have fallen more than 16 percent.

Shares of the sporting goods retailer changed hands recently at $56.48, up nearly 2 percent.

Potential new stores, a recently launched co-branded credit card, as well as the strength of Cabelas' brand as a sporting goods retailer was lauded by the analysts, who attended a conference with management Wednesday at company headquarters in Sidney, Nebraska.

"We came away with greater confidence," said DA Davidson's Andrew Burns, who nudged his target up 3 percent to $65 and maintained a Buy rating.

Cabelas last month forecast 2015 revenue growth in the low "double digits" with earnings growth in the "high-single to low-double-digits."

But the company has missed Wall Street's earnings estimates in three of the past four quarters.

Full-year adjusted profits fell in 2014 by more than 11 percent to $2.81 a share, while sales grew just 1.3 percent to
$3.65 billion.

Yet William Blair's Mark Miller called the company's current performance forecast "reasonable" and said Cabala's is "on a stronger footing" than during 2014.

Miller reiterated an Outperform rating and said he's encouraged by same-store sales growth, as well as recent federal data on gun purchase background checks that suggests firearms sales may be stabilizing.

Stephens' Richard Nelson reiterated an Overweight rating $66 target, noting that Cabelas sees a chance to increase its co-branded credit card accounts, particularly in the Southeast, where less than 2 percent of the accounts are located.

During the recent fourth quarter, Cabelas average balance of credit card loans grew 12.1 percent to $4.2 billion.

At the end of the recent fourth quarter, Cabelas operated 64 retail stores ranging from up to 246,000 square feet and down to 40,000 square feet for its recently launched Outpost store format.

But Nelson said the company has decided its Outpost format, which includes eight locations, is too small.

"They're going to make some adjustments," Nelson said, although Cabelas continues to see a long-term potential for a total of 225 stores counting all formats.