What Happened?
Shares of sporting goods retailer Academy Sports & Outdoor (NASDAQ: ASO) fell 3.2% in the afternoon session after Barclays initiated coverage on the company with a neutral 'Equal-Weight' rating and a $51 price target.
The bank pointed to several risks that balanced the company's expansion opportunities. Concerns included inventory growing faster than sales, challenges in elevating its footwear brand mix, and significant national competition. The research firm also noted that broader economic and potential tariff uncertainty affected the company's outlook. This initiation came after Academy Sports reported second-quarter earnings that fell short of analyst forecasts and after other firms, like Citigroup, downgraded the stock.
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What Is The Market Telling Us
Academy Sports’s shares are quite volatile and have had 18 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 4 days ago when the stock gained 4.1% as a key inflation data aligned with forecasts, bolstering hopes for continued interest rate cuts from the Federal Reserve.
The Personal Consumption Expenditures (PCE) price index, the central bank's preferred gauge of inflation, showed a slight year-over-year increase in August but did not surprise economists. This report was met with relief on Wall Street, as it suggests inflationary pressures remain contained, giving the Federal Reserve more leeway to continue its monetary easing policy. Investors interpreted the news as a positive sign that the Fed can support the economy without risking runaway inflation. The positive sentiment helped the major indices claw back some of the losses from a recent three-day slide, with stocks rising across various sectors.
Academy Sports is down 12.9% since the beginning of the year, and at $49.26 per share, it is trading 19.5% below its 52-week high of $61.17 from December 2024. Investors who bought $1,000 worth of Academy Sports’s shares 5 years ago would now be looking at an investment worth $3,792.
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