Hibbett (NASDAQ:HIBB) rallied in early trading on Tuesday after Bank of America upgraded the sporting goods retailer to a Buy rating from Neutral.
BofA thinks HIBB could issue a positive same-store sales upside given better availability of high heat classic footwear from Nike in comparison to significant out of stocks last year, a better launch calendar, the delayed Back-to-School season, and on time receipts of holiday inventory in comparison to last year when items were delayed.
BofA also has the view that HIBB’s customer base remains strong and is paying “elevated price with elevated wages."
It is also noted that HIBB churned up positive same-store sales during the last recession while the stock outperformed.
On the issue of markdowns, analyst Alexander Perry said markdown risk associated with elevated Nike seasonal apparel inventory was already contemplated in HIBB’s F2H guidance and HIBB has a longer selling window given southern store footprint.
On the data front, BofA noted that Placer data implies acceleration in three-year foot traffic trends thru October and web traffic trends are also strong.
BofA assigned a price objective of $75 to HIBB to rep more than 30% upside potential.
Shares of Hibbett rose 5.33% in premarket action to $59.89.