Monday - Mizuho (NYSE:MFG) Securities has upgraded Tractor Supply Company (NASDAQ:TSCO) stock rating from Neutral to Outperform, setting a new price target at $60.00, up from the previous $54.00.
The firm's analysts cite several factors contributing to a more favorable view of the retailer's prospects, including positive trends in the pet sector, which accounts for approximately 25% of sales, and a recovery from the impact of commodity price deflation affecting its animal feed revenue.
Tractor Supply Company, which experienced a decline in stock value following its early December analyst day, is now considered by Mizuho as a top pick within the Consumer Hardlines sector. The new price target is based on a multiple of 24 times the updated fiscal year 2026 earnings estimate of $2.48 per share, increased from $2.45.
The analysts at Mizuho expect low single-digit percentage comparable store sales growth in the fiscal year 2025. They also believe that Tractor Supply's newly established financial targets, which include comparable store sales growth of 3-5% and annual earnings per share growth of 8-11%, are more than achievable. This optimism is further supported by the potential for operating margins to surpass 11%, compared to the current guidance of just over 10.5%.
Mizuho's positive outlook is bolstered by three key potential earnings drivers for Tractor Supply: an estimated $130-150 million profit pool from a growing retail media business, a $50 million opportunity within exclusive brands, and the accretive effects of the pet prescription and healthcare business following the acquisition of Allivet. These elements are expected to collectively push the company's earnings power towards $3 or more over the medium term.
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