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Telsey analysts told investors in a research note that they view the company as a unit and sales growth story “driven by market share gains as the company expands in existing markets and enters new markets with a better assortment, customer service, and go-to-market strategy.”
The firm acknowledges that the stock’s low valuation “reflects the negative comp trend that began in 1Q22,” and they expect it to persist until 4Q23, alongside “skepticism around the sustainability of a LDD operating margin vs. 4.1% in 2019.”
“However, the hunting/outdoor categories that have declined the most are nearing normalization and the operating margin gains seem structural, signaling 2023 should be a reset year with a return to growth and stable profitability in 2024,” wrote the analysts.
“We model sales growth of 5.8% in 2024 vs. a decline of 2.1% in 2023 and an operating margin of 12.2% in 2024 vs. 12.0% in 2023,” they concluded.
