The pressure on consumers’ discretionary spending due to macro challenges (high inflation and interest rates) has dented investors’ confidence and weighed on Boot Barn’s (NYSE:BOOT) stock. Shares of this footwear, apparel, and accessories retailer have fallen by 44% in the past year. However, its solid financial performance, ability to drive full-price selling, store growth, and low valuation keep Wall Street analysts bullish.
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Piper Sandler analyst Peter Keith has included BOOT stock in his five favorite names for 2023. Keith stated that the consumer spending environment appears “murky” for 2023. He is, however, supporting growth stocks with discounted valuations that are recession-proof.
Besides for Keith, Bank of America Securities analyst Jason Haas initiated coverage of BOOT stock with a Buy recommendation. Haas is bullish about the company’s store growth potential in the long term and sees it as a “best-in-class” western footwear and apparel retailer.
Boot Barn recently announced preliminary results for the third quarter of Fiscal 2023. The company said net sales increased by 5.9% to $514.6 million in Q3. While same-store sales declined by about 3.6%, it was expected as the company was up against tough year-over-year comparisons.
The company expects to deliver earnings of $1.74 in Q3, down from $2.27 in the prior year, reflecting an increase in freight expenses. Further, this missed analysts’ expectations of $1.77.
What stands out is that the retailer has continued to open new stores, which is key to its growth (new stores are outperforming management’s expectations). So far in Fiscal 2023, it has opened 33 stores, bringing the total count to 333 at the end of Q3. Further, the company has managed to drive full-price selling despite a higher promotional environment (holiday sales), which is positive and cushions margins.
What’s the Prediction for BOOT Stock?
BOOT stock has a Strong Buy consensus rating on TipRanks. It has received seven Buy and one Hold recommendations. Meanwhile, analysts’ average price target of $86.86 implies 26.91% upside potential. Furthermore, BOOT stock scores a nine on TipRanks’ Smart Score system, indicating it is more likely to beat broader market averages.
Bottom Line
Boot Barn’s solid new store pipeline, higher store productivity (exceeding the pre-pandemic levels), and full-price selling augur well for growth. Moreover, analysts’ bullish outlooks and an Outperform Smart Score on TipRanks imply that Boot Barn stock could outperform broader markets.
Additionally, Boot Barn stock is trading at a forward P/E multiple of 11.97, much lower than its five-year average multiple of 21.1. It also compares favorably with the sector median.
