Tractor Supply Company (NASDAQ:TSCO) shares rose more than 3% on Monday after Mizuho analysts upgraded the stock to Outperform from Neutral, raising the price target to $60 from $54. The upgrade reflects growing confidence in the company’s ability to leverage rebounding trends and operational improvements for sustained growth.
Tractor Supply is positioned to capitalize on a recovery in its pet segment, which accounts for approximately 25% of its sales, alongside the stabilization of commodity prices impacting its animal feed business, another 25% of revenue. The recent pullback in the stock, following the company’s analyst day in early December, presents an attractive entry point into a business model that continues to improve.
The company has outlined achievable financial targets, including comparable sales growth of 3%-5% annually and EPS growth of 8%-11%, supported by a low-single-digit comparable sales increase forecast for fiscal 2025. Operating margins are expected to exceed 11%, surpassing the current guidance of 10.5%, driven by several factors. These include a profit boost of $130-$150 million from its expanding retail media business, a $50 million opportunity within exclusive brands, and contributions from its growing pet prescription and healthcare segment following the acquisition of Allivet.
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