11:09 AM EDT, 09/11/2024 (MT Newswires) -- Academy Sports & Outdoors (ASO) reported "soft" Q2 results that missed revenue expectations and narrowly exceeded earnings expectations as well as a lower outlook, but there are reasons for optimism, Wedbush Securities said in a Wednesday note.

The sports goods retailer is expected to post strong long-term growth as it benefits from value pricing, a new loyalty program, personalized offers, new merchandise, and contributions from new stores, potentially boosting performance in Q4, Wedbush said.

"While the company also materially lowered [fiscal-year 2024] guidance, it has now 'derisked' the back half of the year, in our view, especially after posting a surprising positive comp for the month of August," analysts said, adding they see this as an encouraging sign since August is the toughest comparison month of Q3 and strength continued through Labor Day.

Academy Sports & Outdoors' Q2 gross margins rose to 36.1%, exceeding expectations, Wedbush said. While the company lowered its 2024 sales and earnings per share guidance, it kept its gross margin outlook and maintained plans for new stores despite ongoing challenges, the note added.

Wedbush has an outperform rating on Academy Sports & Outdoors with a price target of $65.

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