Hibbett Sports, Inc. HIBB reported robust results for the fiscal third quarter, with little impact of government stimulus, and appears poised to perform well during the holiday season, according to BofA Securities.
The Hibbett Sports Analyst: Alexander Perry maintained a Buy rating on Hibbett Sports and raised the price target from $50 to $55.
The Hibbett Sports Thesis: The company’s substantial earnings upside in Friday's third-quarter report was driven by same-store sales, with brick-and-mortar growth of 17.5% and e-commerce growth of 50.7%, Perry said in a Monday note.
Government stimulus had a “minimal impact,” with same-store sales being driven by the following, the analyst said:
- New customer acquisition driven by omnichannel initiatives
- Strong product cycle, led by Nike Inc NKE
- Shift in spending from travel, leisure and entertainment into premium athletic footwear and comfort apparel
“Gross margin of 38.1% (vs. our 32.9%) benefited from a low promotional environment and leverage of store occupancy expense partially offset by higher mix of e-comm. sales,” he said.
The company is “taking share in a challenging COVID-19 environment,” Perry said.
The analyst raised the earnings estimate for the fiscal fourth quarter from 70 cents per share to $1.06 per share to reflect high quality inventory, strong Nike product cycle, little impact from shutdowns due to the second wave of infections and continued gross margin expansion, according to BofA.
HIBB Price Action: Shares of Hibbett Sports were trading 1.36% higher to $43.22 at last check Monday.
Public domain photo via Wikimedia.
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