What Happened?
Shares of sporting goods retailer Academy Sports & Outdoor (NASDAQ: ASO) jumped 3.9% in the afternoon session after analyst firm Monness Crespi & Hardt initiated coverage on the company with a 'Buy' rating.
Analyst firm Monness Crespi & Hardt began its analysis of the company with a “Buy” rating and set a price target of $65. The firm pointed to the potential for high single-digit sales growth and mid-teens earnings per share growth. This optimism stemmed from the company's plans for new store openings and investments in e-commerce and technology. The analyst also noted that Academy Sports' stock traded at a significant discount to its competitor, Dick's Sporting Goods, despite what they saw as a stronger growth profile. The positive analyst view coincided with a broader lift for retail stocks, as a weaker-than-expected jobs report increased investor hopes for a potential cut in interest rates.
After the initial pop the shares cooled down to $51.30, up 4.2% from previous close.
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What Is The Market Telling Us
Academy Sports’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock dropped 3.6% on the news that the broader market tumbled in the morning session after a surprisingly weak U.S. jobs report and the announcement of new, widespread tariffs on imported goods. The U.S. economy added only 73,000 jobs in July, falling far short of the 109,000 forecast. Compounding the issue, job gains for May and June were revised down by a combined 258,000, signaling what some see as “increasing signs of fragility” in the labor market. Simultaneously, the White House announced new tariffs, ranging from 10% to 41%, on goods from 92 countries. This “double whammy” of negative news has intensified fears that ongoing trade wars are damaging the U.S. economy. The combination of a weaker labor market and new trade barriers has rattled investor confidence, fueling expectations that the Federal Reserve may be forced to cut interest rates to support the economy.
Academy Sports is down 9.3% since the beginning of the year, and at $51.30 per share, it is trading 18.2% below its 52-week high of $62.75 from September 2024. Investors who bought $1,000 worth of Academy Sports’s shares at the IPO in October 2020 would now be looking at an investment worth $3,949.
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