Hedgeye Issues Short Call on Boot Barn, Predicts 75% Downside
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Source: seekingalpha
- Short Call Outlook: Hedgeye analyst Brian McGough highlights a potential 75% downside for Boot Barn, primarily due to overly optimistic market assumptions regarding its expansion from approximately 515 to 1,200 stores.
- Earnings Concerns: The analyst argues that the market is materially mis-modeling earnings potential as same-store sales slow and rent pressures increase, projecting sustainable EPS at around $4 compared to Street expectations exceeding $8.
- Overvaluation Issues: While Boot Barn screens reasonable at about 14x EBITDA based on recent growth, it is deemed significantly overvalued on normalized earnings power, suggesting it may struggle to maintain a 10x earnings multiple.
- Short Interest Insight: With a short interest of 11.8%, Boot Barn reflects widespread market skepticism regarding its future performance, indicating a lack of investor confidence in its growth trajectory.
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Analyst Views on BOOT
Wall Street analysts forecast BOOT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for BOOT is 232.28 USD with a low forecast of 195.00 USD and a high forecast of 282.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
12 Analyst Rating
10 Buy
2 Hold
0 Sell
Strong Buy
Current: 172.290
Low
195.00
Averages
232.28
High
282.00
Current: 172.290
Low
195.00
Averages
232.28
High
282.00
About BOOT
Boot Barn Holdings, Inc. is a lifestyle retailer of western and work-related footwear, apparel, and accessories for men, women and children. The Company carries an assortment of denim, western shirts, cowboy hats, belts and belt buckles, western-style jewelry, and accessories. Its western assortment includes various brands such as Ariat, Cinch, Cody James, Corral, Dan Post, Durango, El Dorado, Idyllwind, Justin, Laredo, Levi’s, Miss Me, Montana Silversmiths, Moonshine Spirit, Resistol, Shyanne, Stetson, Tony Lama, Twisted X, and Wrangler. Its work assortment includes rugged footwear, outerwear, overalls, denim and shirts, including safety-toe boots and flame-resistant and high-visibility clothing. Its e-commerce Websites consist primarily of bootbarn.com, sheplers.com, countryoutfitter.com, and third-party marketplaces, as well as the Boot Barn app. The Company operates approximately 475 stores in 49 states.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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Hedgeye Issues Short Call on Boot Barn, Predicts 75% Downside
- Short Call Outlook: Hedgeye analyst Brian McGough highlights a potential 75% downside for Boot Barn, primarily due to overly optimistic market assumptions regarding its expansion from approximately 515 to 1,200 stores.
- Earnings Concerns: The analyst argues that the market is materially mis-modeling earnings potential as same-store sales slow and rent pressures increase, projecting sustainable EPS at around $4 compared to Street expectations exceeding $8.
- Overvaluation Issues: While Boot Barn screens reasonable at about 14x EBITDA based on recent growth, it is deemed significantly overvalued on normalized earnings power, suggesting it may struggle to maintain a 10x earnings multiple.
- Short Interest Insight: With a short interest of 11.8%, Boot Barn reflects widespread market skepticism regarding its future performance, indicating a lack of investor confidence in its growth trajectory.
Continue Reading