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Vista Acquires Stone Glacier; Street Says Buy

Outdoor sports product manufacturer Vista Outdoor Inc. (VSTO) revealed that it has acquired Stone Glacier. Shares of Vista rallied 4% on Tuesday and a further 1.6% in the extended trading session.

Stone Glacier builds performance hunting gear designed for backcountry use. With this deal, Vista will be able to widen its product offerings to include packs, camping equipment and technical apparel categories.

The transaction was financed with cash in hand and available liquidity under its asset-based revolving credit facility. Vista expects the deal to be immediately accretive to earnings, excluding transaction and transition costs. Vista expects its leverage ratio to be below 1.0x by the end of Fiscal Year 2022.

Executive Comments

The CEO of Vista Chris Metz, said, “Stone Glacier enhances our ability to enter and leverage the camping category, which has exploded in popularity over recent years. The acquisition also further bolsters our reputation as the acquirer of choice in the outdoor industry.”

“This partnership comes at a great time for our business, and we are excited for the support that Vista Outdoor will provide to accelerate our growth and continue developing industry-leading products,” said Stone Glacier President Jeff Sposito.

Stock Rating

On December 6, B.Riley Financial analyst Eric Wold maintained a Buy rating on Vista with a price target of $78. The price target implies 81.1% upside potential from current levels.

Wold said, “Although 2021 results have already benefited (and are expected to continue to benefit) from the surge in demand for ammunition and the ramp in production from the Remington manufacturing facility acquired late last year, our 2022 revenue growth projection of 11% is driven by the combination of a 15% increase in ammunition revenues (as the Remington facility is expected to exceed a $300M revenue run-rate) and a 5% in revenues from all other outdoor activity and shooting sports categories.”

Consensus among analysts is a Strong Buy based on 5 unanimous Buys. The average Vista price target stands at $62 and implies upside potential of 44% to current levels.

Smart Score

Vista scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that VSTO has strong potential to outperform market expectations.

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