Deutsche Bank Downgrades Tractor Supply Company (TSCO) to Hold
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Deutsche Bank downgraded Tractor Supply Company (NASDAQ: TSCO) from Buy to Hold with a price target of $76.00 (from $100.00). The change follows updated guidance. Analyst Adam Sindler said the company's issues are clearly more than just weather.
"We had been cautious on 3Q16 results coming out of the 2Q print and were below Factset consensus on both comps and EPS given the difficult multi-year compare and no visibility into September weather, with September presenting the easiest compare. While weather seems to be one factor here, the press release discusses several other factors that are more concerning in our view, especially as they relate to 4Q16 and beyond. We have been very clear on our view that TSCO needs to get back to a mid single digit comp in the fourth quarter to allay concerns that the current issues are less structural than cyclical, which had underpinned our Buy recommendation," said Sindler.
"TSCO faces its easiest compares in the fourth quarter on a 1-yr and multi year basis by a relatively wide margin. TSCO also gets the benefit of an extra day in the 4Q16 comp, an approximate 75 basis point tailwind. Guidance, on the other hand seems to imply something in the range of 1% to 3%. TSCO also has a difficult compare on the horizon in 1Q17. With the prospect of well below average comps in 3Q16, 4Q16 and potentially 1Q17, and with new details on underlying issues (discussed below) we are moving from Buy to Hold," added the analyst.
Shares of Tractor Supply Company closed at $83.53 yesterday.
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