Wells Fargo analyst Zachary Fadem maintained a Hold rating on National Vision Holdings (EYE – Research Report) yesterday and set a price target of $17.00.
Zachary Fadem has given his Hold rating due to a combination of factors that indicate a nuanced outlook for National Vision Holdings. The first quarter results were in line with Street expectations and showed some positive developments, such as the expansion of telemedicine initiatives, which are expected to mitigate some downside risks. However, the company is still grappling with broader economic challenges that affect its core low-income consumer base, suggesting a cautious approach is warranted. Moreover, while the company’s performance in March and April showed improvement, a more significant uptick would be necessary to fully get back on track for the fiscal year, with some reliance on second-half hopes linked to telemedicine in Texas.
Additionally, Fadem notes that while National Vision Holdings has raised its long-term store target and has seen success with telemedicine, these positive aspects are tempered by persistent pressures on the optical purchase cycle and soft demand from low-income customers. The high-end guidance for the year has been discarded due to the year-to-date weakness, pushing expectations to the lower end of the previous guidance. All in all, while there are some promising aspects to National Vision Holdings’ strategy and market position, the current environment and the extended purchase cycle make a cautious outlook sensible, hence the Hold rating.
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National Vision Holdings (EYE) Company Description:
National Vision Holdings, Inc. engages in optical retail. It operates through Owned and Host, and Legacy segment. The Owned and Host segment includes two brands, America’s Best and Eyeglass World, and Vista Optical locations in Fred Meyer stores. The Legacy segment involves in the operation of inventory and laboratory processing services to vision centers in Walmart retail locations. The company was founded in 1990 and is headquartered in Duluth, GA.
