UBS Cuts Price Target on Tractor Supply (TSCO) to $88; Reiterates Buy
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UBS maintained a Buy rating on Tractor Supply Company (NASDAQ: TSCO), and cut the price target to $88.00 (from $102.00), following the company's pre-announcement. TSCO lowered its FY EPS outlook to $3.22-$3.26 from $3.35-$3.40.
Analyst Michael Lasser commented, "Historically, TSCO's performance provided evidence to support that it could power through external factors such farm income, economic conditions, & weather. Now, that's being tested. Its 3Q'16 will not only mark the 3rd time in 4 Qs that it'll see an underwhelming comp (it's guiding 0% to -1%), but it'll also mark the period where it admitted it's no longer immune from agricultural sector headwinds. This is a big change from the past. According to the USDA, farm incomes fell to $80.7 bn in '15 from a peak of $123.8 bn in '13. The level this year is on pace to be $71.5 bn. Our read is that this will eventually stabilize & act as less of a drag on TSCO's business. But, we believe the impact could be that the story will now be more sensitive to the conditions of its customer set. Still, we think between its unit growth, easier compares, & strong competitive positioning, it could return to its mid-teens EPS growth story over time."
Shares of Tractor Supply Company closed at $83.53 yesterday.
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