Image source: Big 5 Sporting Goods Corp.

What happened

Shares of Big 5 Sporting Goods Corp. (NASDAQ:BGFV) were up 11% as of 1:15 p.m. EDT Thursday following an analyst upgrade.

So what

More specifically, Duetsche Bank analyst Mike Baker increased his rating on the sporting goods retailer to "buy" from "hold," and simultaneously increased his 2017 per-share price target on Big 5 to $16.50 from $10.

To justify his bullish stance, Baker cited a combination of Big 5's higher merchandise margins and accelerating sales trends given market share gains following "competitor liquidations." Baker also believes these sales and profitability improvements aren't "fully reflected in BGFV's valuation."

Now what

Recall The Sports Authority and Sport Chalet filed for bankruptcy earlier this year, with both key competitors ultimately pursuing a liquidation and closure of all locations rather than bankruptcy reorganization. In fact, during last quarter's earnings conference call, Big 5 Sporting Goods management even cited increased promotional activity in connection with these liquidations as contributing to a particularly challenging retail environment.

Even so, Big 5 CEO Steve Miller insisted at the time, "Despite these challenging conditions, we continued to manage a very healthy balance sheet and our overall financial condition, which we believe positions us very positively for the future."

It stands to reason, then, that as the respective liquidations of The Sports Authority and Sport Chalet wind down, Big 5 Sporting Goods' more than 400 locations should be obvious beneficiaries as consumer traffic inevitably shifts to remaining industry competitors. As such, it's no surprise to see analysts starting to voice their optimism for Big 5's future today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.