Hibbett Sports (HIBB – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Justin Kleber from Robert W. Baird downgraded the rating on the stock to a Hold and gave it a $87.50 price target.
Justin Kleber has given his Hold rating due to a combination of factors surrounding the proposed acquisition of Hibbett Sports by JD Sports. The offer from JD Sports provides an immediate and secure return for shareholders, especially given the current uncertainties in the retail sector. The proposed purchase price is slightly lower than Baird’s optimistic valuation, yet it is close to the current trading price, offering minimal upside potential for investors, which justifies the Hold status. Kleber perceives little regulatory risk of the acquisition being blocked, as the market share increase for JD Sports in the U.S. athleisure market is moderate, and their store portfolios are seen as complementary.
Moreover, the financial terms of the merger highlight a valuation of Hibbett Sports that is reasonable when compared to industry peers. The acquisition price reflects a multiple that is generally in line with the market, with only a slight discount to some competitors. Kleber’s downgrade to Neutral also considers the firm’s future growth prospects and financial forecasts, which, while potentially positive, are not free from risk given the uncertain economic environment. With the most likely buyer now making a formal offer, the rationale for a more aggressive investment stance diminishes, leading to the Hold recommendation and an adjusted price target that aligns with the bid.
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Hibbett Sports (HIBB) Company Description:
Hibbett Sports, Inc. engages in the provision of sporting goods business. It features a core selection of brand name merchandise emphasizing athletic footwear, athletic and fashion apparel, team sports equipment, and related accessories. Its shopping channel includes store locations, and websites or apps. The company was founded in 1945 and is headquartered in Birmingham, AL.
