On Wednesday, UBS adjusted its stance on Boot Barn (NYSE:BOOT) Holdings Inc. (NYSE: BOOT) stock, shifting from a Buy to a Neutral rating. The firm also reduced its price target for the company's shares to $125 from the previous $140.
The decision to downgrade Boot Barn's stock came after UBS's analysis indicated that its initial projection had materialized. Boot Barn's same-store sales growth, which was anticipated to pick up over the calendar year 2024, has indeed shown signs of improvement. This uptick in sales growth was expected to lead to an expansion in the company's price-to-earnings (P/E) ratio.
Boot Barn's comparable store sales shifted from a 9.7% decline in the fourth quarter of 2023 to a smaller decrease of 5.9% in the first quarter of 2024. UBS forecasts this trend will continue, projecting a slight increase of 0.9% in the second quarter of 2024, which corresponds to the first quarter of the fiscal year 2025. During this period, Boot Barn's P/E ratio rose to 20 times its earnings from 14 times.
Despite anticipating a strong first-quarter report, UBS notes that this positive outcome is likely already expected by the market. Additionally, the firm has adopted a more cautious macroeconomic outlook, which suggests there could be higher downside risks to earnings per share (EPS) than previously anticipated. This revised perspective has led to a view that the potential upsides and downsides for Boot Barn are now more evenly balanced.
In other recent news, Boot Barn Holdings Inc. has been the focus of several analyst reviews due to recent developments. Benchmark increased its price target for Boot Barn to $140, up from the previous $110, maintaining a Buy rating.
This revision followed the company's report of a 1.4% increase in comparable store sales for the first quarter of fiscal year 2025. Benchmark also adjusted its fiscal year 2025 earnings estimate for Boot Barn upwards to $4.80 from the previous estimate of $4.45.
Similarly, Baird maintained a Neutral rating on Boot Barn but raised its price target from $100 to $132. Craig-Hallum expressed a positive stance on Boot Barn, increasing its price target from $120 to $150, while TD Cowen raised its price target to $145. Both firms cited a surge in same-store sales and strategic store expansion.
BTIG increased Boot Barn's price target to $150 from $125, revising the company's first fiscal quarter earnings per share (EPS) estimate to $1.15 from $0.99. Lastly, Citi reaffirmed its Buy rating on Boot Barn with a consistent price target of $122. All adjustments reflect recent developments in the company's performance and growth strategy.
InvestingPro Insights
Following UBS's recent rating adjustment on Boot Barn Holdings Inc, a look at the latest InvestingPro data reveals a mixed picture that aligns with UBS's cautious stance. Boot Barn's market capitalization stands at $3.74 billion, with a P/E ratio of 25.35, reflecting a market that values its recent profitability. The company's revenue for the last twelve months as of Q4 2024 is reported at $1.67 billion, with a modest growth rate of 0.57%. Despite a quarterly revenue decline of 8.74%, Boot Barn's gross profit margin remains strong at 36.86%, indicating effective cost management.
InvestingPro Tips suggest that Boot Barn's stock price movements have been quite volatile, which may be a point of consideration for risk-averse investors. On the positive side, the company's cash flows can sufficiently cover interest payments, and it operates with a moderate level of debt, which could provide some stability. Additionally, analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. Investors should note that Boot Barn does not pay a dividend, which could be a deciding factor for those seeking regular income streams from their investments.
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