Roth/MKM has increased its price target for American Outdoor Brands Inc. (NASDAQ: NASDAQ:AOUT) shares, setting the new goal at $11.00, raised from the previous $10.50. The firm continues to endorse a Buy rating for the stock.
American Outdoor Brands reported a solid first fiscal quarter, marked by consistent demand in the Traditional sales channel. This performance helped to counterbalance some irregularities seen in the E-commerce segment specifically related to shooting sports.
The company's gross margins remained robust, and tight operational expense management contributed to an adjusted EBITDA that surpassed both Roth/MKM's and the consensus estimates.
The management of American Outdoor Brands has confirmed its financial outlook for fiscal year 2025, which projects up to a 2.5% year-over-year growth, along with an expansion in adjusted EBITDA margin by 5.8%, which is more than 90 basis points at the midpoint.
The analyst's commentary highlighted the company's ability to deliver a strong quarter despite some challenges. The stable demand in the Traditional channel and the company's effective management of gross margins and operational expenses were key factors leading to the financial beat.
The increase in the price target to $11.00 reflects the analyst's positive outlook on American Outdoor Brands, based on the company's recent performance and management's confidence in its future growth and profitability.
Academy Sports and Outdoors, Inc. reported mixed results for the second quarter, with earnings slightly exceeding expectations but revenue falling short. The company posted adjusted earnings per share of $2.03, a notch above the analyst consensus of $2.02, while revenue decreased 2.2% year-over-year to $1.55 billion, missing estimates of $1.58 billion.
These developments come amidst a challenging economic environment as noted by CFO Carl Ford (NYSE:F).
In response to the less than anticipated revenue, Academy Sports has revised its full-year revenue guidance to a range of $5.90-$6.08 billion, a significant drop from the previous outlook of $6.07-$6.35 billion.
The company also expects a 3-6% decline in comparable sales for the year, contrasting with its prior forecast of -4% to +1%.
Despite these adjustments, the company has maintained its full-year gross margin guidance of 34.3-34.7%. In addition, Academy Sports is progressing with strategic initiatives, including the opening of new stores and the enhancement of its omnichannel capabilities.
The company opened one new store in the second quarter and plans to open 15-17 total locations in fiscal 2024.
InvestingPro Insights
Following the upbeat analysis from Roth/MKM, InvestingPro data underscores some key financial metrics for American Outdoor Brands Inc. (NASDAQ: AOUT). The company's market capitalization stands at $111.76 million, indicating its size within the market. Despite a challenging past twelve months with an operating income margin at -5.51%, analysts are optimistic, predicting a turn towards profitability this year. This is reinforced by the fact that American Outdoor Brands operates with a moderate level of debt and has liquid assets that exceed short-term obligations, providing financial stability.
InvestingPro Tips further suggest that, apart from the expected net income growth this year, the company does not pay dividends, which could mean that it is reinvesting earnings back into the business to fuel growth. Moreover, with a Price/Book ratio of 0.64 as of Q1 2025, the stock may appeal to value-oriented investors seeking assets potentially trading below their intrinsic value. For those interested in deeper analysis, InvestingPro offers additional tips on American Outdoor Brands, accessible through their platform.
The increased price target by Roth/MKM seems to align with the InvestingPro Fair Value estimate of $10.73, suggesting that the stock may have room to grow. As the company navigates its fiscal year with an eye on profitability and growth, these insights could provide investors with a clearer picture of its potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.