Hibbett Inc shares tanked 20% on Friday: this might be why

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Dec 3, 2021
  • Hibbett Inc reported market-beating Q3 results & gave strong future guidance.
  • BofA Securities' Alexander Perry downgraded the stock last night & slashed PT.
  • Shares of the sporting apparel retailer tanked close to 20% on Friday morning.

Hibbett Inc (NASDAQ: HIBB) reported market-beating Q3 results and gave strong guidance for the future on Friday. Shares jumped in premarket but tanked nearly 20% on open, probably as shareholders focused on BofA that downgraded the stock to “neutral”.

BofA analyst slashed his price target for HIBB

Cutting his price target for HIBB to $88, BofA Securities’ Alexander Perry wrote in a note to clients:

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We estimate there will be a 5-10% YoY decline in consumer income in C1H22 for someone earning $50,000 given headwinds from two rounds of economic impact payments (~$2,000), potentially lower lump sum Child Tax Credit payments (given advanced payments in 2021), and subdued real wage growth given rising inflation.

It is noteworthy, however, that Perry’s bearish call came before the earnings report, and his price target still marked a 20% upside from where the stock closed on Thursday.

Q3 financial performance

Hibbett reported $25.2 million in net income ($1.68 per share) versus the year-ago figure of $25.3 million ($1.47 per share). At $381.7 million, sales were up 15.2%. According to FactSet, experts had forecast $1.62 of EPS on $360 million in sales.

Comparable sales also jumped 13% in the recent quarter versus 5.2% expected. In the earnings press release, CEO Mike Longo confirmed that the sporting goods retailer was well-positioned for the holiday season after a material improvement in inventory despite supply chain issues in Q3.  

Guidance for the future

Hibbett now forecasts up to $11.90 in per-share earnings this year, including $1.85 to $2.05 it expects in Q4. In comparison, analysts were calling for $1.76 of EPS this quarter and $11.41 for the full financial year.

The U.S. firm expects a little under 10% growth in fourth-quarter same-store sales and a little under 20% for the year.

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