Overview#
Mizuho has reduced its price target for Tractor Supply Company (NASDAQ:TSCO) from $58 to $50 while keeping an Outperform rating. The stock is currently priced at $39.57, reflecting a 20% decline year-to-date. Despite this drop, some analyses suggest that the stock may still be undervalued.
Weak Pet Sales Impact#
The firm pointed to disappointing first-quarter results and a cautious outlook for the full year. Specifically, pet sales have negatively impacted comparable sales by over 100 basis points, which means they have reduced the overall sales growth rate. Additionally, for the first time since the second quarter of 2024, the company experienced a decline in quarterly transaction growth.
Strategic Changes#
In response to these challenges, Tractor Supply is accelerating its rollout of FreshPet products to about 700 locations, up from the previously planned 500. Other product categories, such as big-ticket items, garden supplies, wildlife products, and apparel, showed improvement in April, which may help offset some of the losses in pet sales.
Future Outlook#
Mizuho anticipates that second-quarter comparable sales will fall within a range of 1% to 3%. The company may adjust its outlook based on the results of this upcoming quarter. Other analysts have also lowered their price targets for Tractor Supply, with BofA Securities and Barclays both setting theirs at $44. Jefferies has adjusted its target to $51 while maintaining a Buy rating, emphasizing the company's resilient business model. Meanwhile, Telsey Advisory Group has kept an Outperform rating with a target of $63, noting that adverse weather and fluctuating consumer demand have contributed to the recent sales challenges.