BofA Securities Downgrades Tractor Supply Company (TSCO) to Neutral, 'Comps likely to be pressured'

BofA Securities analyst Elizabeth Suzuki downgraded Tractor Supply Company (NASDAQ: TSCO) from Buy to Neutral with a price target of $226.00 (from $270.00).

The analyst comments "We’re downgrading Tractor Supply Company (TSCO)to Neutral from Buy ahead of the company’s 2Q earnings call on Thursday, July 27th. We expect TSCO to report an earnings miss and cut guidance given a fading tailwind from inflation and worsening demand for discretionary categories. We estimate one third of TSCO’s revenue comes from animal/pet food. This makes corn, soy, and chicken prices a strong (0.8 correlation) leading indicator for the inflation component of TSCO’s same-store sales (comp) growth on a three-quarter leading basis. These commodities saw strong inflation over the pandemic and TSCO’s comps benefited, but prices flipped negative YoY at the start of this year, so we expect a lessening tailwind through 2023 and headwind by 1Q24. In 2014, TSCO saw comp pressure and a 26% stock price correction from a deflationary commodity cycle."

For an analyst ratings summary and ratings history on Tractor Supply Company click here. For more ratings news on Tractor Supply Company click here.

Shares of Tractor Supply Company closed at $214.66 yesterday.

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