Goldman Sachs analyst Kate McShane has maintained a Buy rating on Academy Sports while lowering the price target from $67 to $60. The revised target suggests a shift in the firm's valuation expectations for the retailer's stock.

Rating and Price Target

The decision to retain the Buy rating indicates continued confidence in Academy Sports' long-term prospects despite the reduced price objective. The new target of $60 is down from the previous $67, reflecting a more conservative near-term outlook.

The adjustment comes as market conditions evolve, prompting a reassessment of the company's potential stock performance.

Academy Sports and Outdoors, Inc. raised its fiscal 2026 sales and earnings guidance following a first quarter where net sales increased 6.7% year-over-year to $1.442 billion. The company reported adjusted earnings per share (EPS) of 93 cents, surpassing consensus estimates, while diluted GAAP EPS climbed 17.6% to 80 cents. Comparable store sales rose 2.9%, and eCommerce revenue surged 17.4%, driven by strength in the outdoor category, particularly fishing and shooting sports. Despite the strong performance, management noted that inflation and high gas prices continue to pressure consumer spending, particularly among lower-income households.

Q1 Performance Highlights

The company attributed the quarterly growth to robust operational execution and strategic initiatives, including the launch of a new suppressors category and the relaunch of its My Academy Rewards loyalty program. "We were pleased with the continued improvement in our results in first quarter, with total sales up 6.7%, driven by increases in both traffic and average ticket," stated Steve Lawrence, CEO. Cash and cash equivalents grew to $337.8 million, and the company generated $121.6 million in free cash flow, a 14.2% increase year-over-year. Gross margin for the quarter was 33.2%, down 71 basis points due to tariffs, partially offset by favorability in freight and shrink.

Updated Fiscal 2026 Guidance

Based on the first quarter performance, Academy raised its full-year sales outlook to a range of 3% to 5% growth, translating to $6.23 billion–$6.355 billion in net sales. The company increased its GAAP EPS guidance range to $5.95–$6.35 and adjusted EPS guidance to $6.40–$6.80. Comparable store sales are expected to be flat to up 2% for the fiscal year. Carl Ford, Executive Vice President and CFO, emphasized that the updated guidance reflects a prudent view of the macroenvironment. "We remain prudent about the macroenvironment and the updated fiscal 2026 guidance range reflects our belief that the consumer will remain under pressure for the duration of 2026," Ford noted.

Strategic Initiatives and Balance Sheet

Academy Sports continues to expand its store base, opening two new locations in Ohio and Oklahoma during the quarter, with plans to open 15 to 20 stores total in the back half of the year. The company is also investing in omnichannel capabilities, expanding same-day delivery platforms to include Uber Eats and Instacart. In May, the company refinanced its long-term debt at a 5.875% rate, generating approximately $2.5 million in annual interest savings. Subsequent to quarter-end, on June 4, the Board declared a 15 cents per share quarterly cash dividend, payable on July 16 to shareholders of record as of June 18.

Analyst Reactions

Following the earnings announcement, several analysts adjusted their price targets on Academy Sports. Wells Fargo analyst Ike Boruchow maintained an Equal-Weight rating and lowered the price target from $56 to $50. JP Morgan analyst Christopher Horvers maintained a Neutral rating and reduced the price target from $60 to $59. UBS analyst Michael Lasser kept a Neutral rating and cut the price target from $56 to $55. Truist Securities analyst Joseph Civello maintained a Hold rating and lowered the price target from $54 to $52.