Boot Barn A 'Buy' Worth $40/Share After M&A, Jefferies Says

In a report published Tuesday, Jefferies analyst Randal J. Konik maintained a Buy rating on

, while raising the price target from $30 to $40, after the company closed the acquisition of Sheplers. The completion of the Sheplers acquisition is expected to consolidate the competitive position of Boot Barn and enhance its online presence. Sheplers is a western lifestyle company with 25 retail stores and a leading e-commerce business. The acquisition will not only strengthen Boot Barn's position as the fastest growing western and work chain in the US, but also allow the company to leverage Sheplers' significant e-commerce expertise. The deal will also "allow BOOT to enter 8 new markets, while enhancing its position in existing markets," analyst Randal Konik said. Other benefits expected from the deal include top-line synergies, as Boot Barn applies its own best practices to Sheplers locations, and cost savings in areas of corporate, e-commerce and buying. Boot Barn expects the transaction to generate annual synergies worth $6-$8 million and be immediately accretive to its earnings after excluding one-time transaction and integration costs. In the report Jefferies noted, "Following the complete integration in CY'16, the acquisition is expected to be 10% accretive to EPS. Based on our analysis, we see potential for these estimates to prove conservative." Deceleration in the specialty western market and execution risk related to the integration of the acquisition could impact Boot Barn's future performance, Konik commented.