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Why Sportsman's Warehouse Stock Ran Higher Today

By Evan Niu, CFA – Sep 1, 2020 at 3:44PM

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Piper Sandler boosted its price target on the sporting goods retailer ahead of earnings tomorrow.

What happened

Shares of Sportsman's Warehouse (SPWH 1.35%) ran higher today, up by 14% as of 2:45 p.m. EDT, after getting an upgrade from Wall Street. Piper Sandler increased its price target on the stock from $16 to $18 and reiterated an overweight rating.

So what

Analyst Peter Keith believes that the sporting goods retailer enjoyed "remarkably strong" sales in the second quarter. That momentum likely continued, potentially even accelerating, throughout the summer. Sportsman's Warehouse has been capitalizing on robust demand for firearms and ammunition, a category that some competing retailers like Dick's Sporting Goods have exited.

A man dressed for the outdoors holding a rifle on a snowy mountainside

Image source: Getty Images.

Demand for outdoor recreation has been broadly resilient during the COVID-19 pandemic, as people can remain socially distanced in that setting.

Now what

Sportsman's Warehouse reports fiscal second-quarter results tomorrow after the close. The company did not provide an outlook due to ongoing uncertainty related to the coronavirus outbreak, but consensus estimates call for revenue of $286 million and earnings per share of $0.29. CEO Jon Barker previously suggested that political factors could help drive gun sales. CFO Robert Julian also added that the higher mix of firearms sales would pressure gross margin.

"In the near term, we view the upcoming election cycle as a potential catalyst for our business," Barker said on the earnings call in June. "Furthermore, we believe COVID-19 is changing consumer behavior and motivating people to spend more time outdoors."

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Sportsmans Warehouse Holdings Stock Quote
Sportsmans Warehouse Holdings
SPWH
$9.77 (1.35%) $0.13
Dick's Sporting Goods Stock Quote
Dick's Sporting Goods
DKS
$119.18 (1.42%) $1.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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