UBS reiterates sell rating on Buckle as topline weakness weighs on stock By Investing.com

On Tuesday, UBS reaffirmed its sell rating on Buckle, Inc. (NYSE:) with a steadfast price target of $32.00. The firm anticipates that Buckle’s negative comparable sales trend will continue through the fiscal year 2024. This expected downturn is predicted to lead to significant fixed cost deleverage and margin pressures for the retailer.

UBS projects a 15% year-over-year decrease in earnings per share (EPS) for fiscal year 2024, following a 14% drop in the previous fiscal year. The firm also estimates a flat five-year EPS compound annual growth rate (CAGR). The financial institution’s analysis suggests that earnings per share falling below market expectations could result in further negative investor sentiment and a decrease in the price-to-earnings (P/E) ratio to 8 times from the current 9.3 times.

The price target set by UBS reflects a 13% downside from Buckle’s current stock price. The firm’s assessment indicates a risk-reward skew of 1:2, suggesting that potential downsides outweigh the upsides for the stock. This outlook is based on the projection of continued sales challenges and the impact on the company’s financial performance.

Investors and market watchers will be monitoring the retailer’s performance closely to see if the trends anticipated by UBS materialize in the coming fiscal year.

InvestingPro Insights

Amid UBS’s sell rating on Buckle, Inc. (NYSE:BKE), real-time data from InvestingPro paints a nuanced picture of the company’s financial health. Buckle’s impressive gross profit margin of 58.83% for the last twelve months as of Q1 2023 indicates a strong ability to control costs relative to revenue. Additionally, the company boasts a significant dividend yield of 10.62% as of 2024, which is a testament to its commitment to returning value to shareholders, having maintained dividend payments for 22 consecutive years.

InvestingPro Tips highlight that Buckle operates with a moderate level of debt and its liquid assets exceed short-term obligations, suggesting a solid financial footing. Moreover, analysts predict the company will be profitable this year, supported by a robust return on assets of 24.14% for the last twelve months as of Q1 2023. Despite UBS’s cautious outlook, these metrics may provide a counterbalance for investors considering the stock’s potential.

For those looking to delve deeper into Buckle’s financials and future prospects, InvestingPro offers additional insights and tips. With a use of the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, accessing a wealth of information to inform their investment decisions, including 5 more InvestingPro Tips for Buckle, Inc.

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