gorodenkoff
Hibet (NASDAQ:HIBB) rallied in early trading on Tuesday after Bank of America downgraded the sporting goods retailer to a Buy rating of Neutral.
BofA thinks HIBB could issue a positive uplift in same-store sales given better high availability heat classic Nike shoes compared to last year’s large stock shortages, better launch timing, back-to-school delay and timely receipt of holiday inventory compared to last year when items have been delayed.
BofA also believes that HIBB’s customer base remains strong and pays “a high price with high salaries”.
It’s also worth noting that HIBB generated positive same-store sales during the last recession, while the stock outperformed.
On the issue of markdowns, analyst Alexander Perry said that markdown risk associated with high inventory of seasonal Nike apparel was already considered in HIBB’s F2H guidelines and that HIBB has a longer sales window given the footprint of southern stores.
On the data front, BofA noted that Placer’s data implies an acceleration in three-year foot traffic trends through October and that web traffic trends are also strong.
BofA has assigned a price target of $75 to HIBB to represent more than 30% upside potential.
Pink Hibbett Actions 5.33% in premarket action at $59.89.
