At Home Group Inc HOME 27% reported solid second-quarter results Tuesday that were driven both by sales growth and strong expense control, and the momentum has continued into the third quarter, according to KeyBanc Capital Markets.
The At Home Analyst: Bradley Thomas maintained a Sector Weight rating on At Home.
The At Home Thesis: The company achieved a record improvement in comps in the second quarter and the trends seem to have continued so far in the third quarter, Thomas said in a note.
At Home’s performance could moderate going ahead, with fall and holiday sales being negatively impacted by seasonal inventory constraints, the analyst said.
Looking at the medium- and long-term, At Home seems well-positioned to benefit from store closures at Pier 1 Imports Inc (Pink: PIRRQ), JC Penney Company Inc (Pink: JCPNQ), and Tuesday Morning Corporation (Pink: TUESQ), he said.
The retailer’s competitive positioning “is supported by its leading merchandise assortment, which is broader than any physical retailer we are aware of, as well as its low prices,” Thomas said.
At Home may continue to benefit from a shift in consumer spending to home-related purchases and away from areas like travel and entertainment, the analyst said.
KeyBanc raised its earnings estimates for fiscal 2020 and 2021 from $1.28 per share to $1.70 per share and from $1.45 per share to $1.80 per share, respectively.