Hibbett Sports Cut At Goldman, Analysts See Little Potential From Here

Goldman Sachs’ Stephen Tanal downgraded the rating for Hibbett Sports, Inc. HIBB from Neutral to Sell, while raising the price target from $33 to $35.

Reasons For The Downgrade

• Possible acceleration in the secular challenges of vendor disintermediation – This would result in continued declines in same-store traffic.
• Hibbett Sports’ premium/ performance assortment not being well aligned with an ongoing shift toward casual/lifestyle product - This is likely to limit growth in same-store ticket, analyst Stephen Tanal said.
• Share losses – Given the absence of an online business, the company could suffer from market share contraction, while investments in IT and ecommerce would worsen P&L pressures.
• Risk to consensus - Tanal expects the company’s SSS to miss consensus expectations for 1Q16. There could be an EPS shortfall in each of the quarters between 2Q and 4Q of 2016. “We expect tough near-term results to drive negative estimate revisions and we expect shares of HIBB to underperform our hardlines coverage universe as a result,” the analyst added.

The EPS estimates for 2016 and 2017 have been reduced from $2.98 to $3.00 and from $3.15 to $3.10, respectively. “Our $35, 12-month price target implies 2% downside vs. 5% average upside across our coverage,” Tanal wrote.