Boot Barn (NYSE: BOOT)
Citi analyst Steven Zaccone has upgraded western wear vendor to neutral, saying that the economic recovery will boot Barn’s financial performance, particularly in areas where electricity is a major driver.
“We believe BOOT is an appealing way to play the economic re-opening in the near-to-medium term based on appealing assortment dynamics and catalysts, a continued margin expansion path led by increasing exclusive brand penetration, and beneficial exposure to the recovery in oil/gas regions,” Zaccone wrote in an investor note.
According to Citi, Boot Barn’s financial performance has lagged behind oil prices since its initial public offering in 2014. Given the rising demand for energy since late 2020, this could indicate that a sales increase is on the way.
“The historic nine-month correlation suggests that BOOT [same store sales] should begin benefiting from increased employment activity in oil/gas regions this Summer, with strength continuing into at least the beginning of CY22,” the note said.
Citi raised its price target for the stock to $92 per share from $65, implying a 22 percent increase in value.
Oil prices are expected to rise nearly 50% in 2021, with WTI crude trading above $72 per barrel this week. Energy stocks have also outperformed the market this year.
“The gradual return of country music concerts, festivals, and state fairs, as well as rodeo season (most notably TX rodeo season in March 2022),” the note stated.
DraftKings (NASDAQ: DKNG)
CEO of Ark Invest Cathie Wood purchased a drop in DraftKings on Tuesday, after the business for sports betting failed to hear of Hindenburg Research’s short position on the stock.
Approximately 688,700 shares were purchased in Wood’s flagship fund, ARK Innovation. DraftKings is now the 17th largest holding in the traded fund, accounting for approximately 1.94% of its allocation. Meanwhile, almost 181,600 shares in ARK Next General Internet ETF have been bought.
DraftKings shares increased more than 1% in premarket trading on Wednesday.
DraftKings shares decreased by around 4.2 percent on Tuesday after Hindenburg announced that it would bet on the stock. The short-sale company questioned the promotional expenditure of the company and the future success in the very competitive sports field.
The report also states that SBTech, a European technology company merged with DraftKings as part of a SPAC deal, generates substantial revenues from doubtful play practices in overseas markets, especially in certain Asian markets.
In December 2019, DraftKings and Diamond Eagle Acquisition Corp. announced their merger and completed the merger in April 2020. DraftKings shares increase by more than 4% per year when investors rotate from their growth stocks.
After rising 6% last week, shares of the Ark Innovation ETF are down less than 1% this week.