We are changing our long-term recommendation for Tractor Supply Co. (TSCO) to Outperform as we anticipate it to perform well above the broader market. Tractor Supply is the largest operator of retail farm and ranch stores in the U.S. with a diverse portfolio of branded and private-label merchandise.
The company has reported record earnings with solid sales in core consumable categories, including animal and pet-related products. Tractor Supply’s unique market position, rapid store expansion plan and prudent inventory management efforts augur well for future operating performance.
However, macroeconomic headwinds, intense competition and high initial expenses related to new store openings could limit the above-market performance of the company. That said, our target price of $75.00, 20.8X 2010 EPS, reflects our long-term Outperform recommendation.Zacks Investment Research
