Stifel Nicolaus Upgrades Big 5 Sporting Goods To Buy

Stifel Nicolaus recently issued a report on Big 5 Sporting Goods Corporation (NASDAQ: BGFV) amid signs of EPS upside in 2016. Analysts at Stifel upgraded Big 5 Sporting Goods to Buy with a $14.50 price target.

David Schick, Raymond Stochel and David Novak, analysts at Stifel, wrote, "We believe BGFV could benefit the most from potential TSA store closures."

The note continued, "BGFV benefits from an improving lower-income consumer and potentially a 'trade down' from high-income consumers pulling back to OPP products [...] this could mean about 15 percent EPS upside."

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2 Key Takeaways

Analysts at Stifel highlighted two key takeaways that could help Big 5 Sporting Goods Outperform 2016 expectations.

1. Weakness From Competitors
Stifel noted reported that Sports Authority, which is privately held, may be preparing to file for bankruptcy and close many of their stores. Stifel believes that Big 5 can take advantage of the closings by taking market share and providing products to previous Sports Authority customers. This has the potential to drive top-line growth and profit margins, as Big 5 can take advantage of having pricing power with less immediate competition.

2. Sports Attractions In California
As Big 5 Sporting Goods has direct exposure to the California sports market, Stifel believes that the company can achieve revenue growth with the announcement of the NFL's St. Louis Rams moving to Los Angeles. Big 5 has the potential to take advantage of an increase in jersey sales and other branded merchandise.

At the time of this publication, Big 5 Sporting Goods was seen trading up 3.53 on the day at $11.74.

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