Shares of cowboy-boot and Western-wear retailer Boot Barn Holdings Inc. are “significantly undervalued,” but country music, rodeo and “the Taylor Swift effect” could pave the way for bigger gains, analysts said on Monday.
“[Boot Barn] shares are well below peak levels, and we see ample opportunity ahead with Country music becoming increasingly prevalent and rodeo season in full swing,” analysts at Jefferies said in a note on Monday.
They also said that Taylor Swift’s Eras tour could translate into more sales for Boot Barn
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as concertgoers plan what to wear to the shows.
“With 2.4 million Taylor Swift tickets sold on Ticketmaster and Seat Geek, which averages out to [about 46,000] per venue, we believe this help will drive top-line for [Boot Barn],” the analysts said.
They added that Google searches for “cute boots” and “what to wear to Taylor Swift concert” rose after Swift’s concert tickets went on sale last year. And they said that if 2% of Swift concert attendees spent an average of $110 at Boot Barn — the amount of a typical purchase there — the tour could result in $10.6 million in extra sales in the first half of Boot Barn’s fiscal 2024, which begins in early spring.
The analysts also pointed to country music’s popularity on the radio and on Apple Music
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and they noted last year’s massive concert-industry comeback following two years of pandemic-related restrictions.
Live Nation Entertainment Inc.
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which owns Ticketmaster, was among the main beneficiaries of the concert industry’s rebound. But it has faced greater scrutiny by lawmakers over its dominant position in that industry and over Ticketmaster’s implosion when tickets for Swift’s Eras tour first went on sale. William Blair analyst Ryan Sundby has said that Live Nation faced concerns over whether 2022 represented “peak earnings power as a ‘reopening play.’”
Apparel retailers, meanwhile, are still navigating an environment in which demand for clothing has remained subdued. However, the Jefferies analysts said they found “healthy store traffic and inventory levels” during visits to locations in Tennessee and Pennsylvania.
The Jefferies analysts have a buy rating on the stock, with an $88 price target. Shares were down 1.7% on Monday.
Shares of Boot Barn are down 17.7% over the past 12 months. By comparison, the S&P 500
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has fallen 10.3% over that period.
This post was originally published on Market Watch
