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National Vision Stock Off After Bank of America Double Downgrade

Bank of America double-downgraded National Vision to underperform from buy, slashing its price target to $50 from $63.
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National Vision  (EYE) - Get National Vision Holdings, Inc. Report shares fell on Friday after Bank of America doubled downgraded the optical retailer to underperform from buy and slashed its price target to $50 from $63.

Analyst Robert Ohmes acted “given headwinds that could pressure sales and EYE's valuation near-term,” he wrote. That includes:

  1. “Tough first-half 2022 same-store-sales comparisons (particularly in the second quarter) against stimulus supported same-store sales growth.
  2. “The potential return of more aggressive competition. Other optical chains have fully re-opened/increased capacity for appointments and look to increase TV and digital marketing spend (similar to EYE's plans to spend on marketing).
  3. “The risk of gas prices rising further and pressuring EYE's lower-income customer's spending and length of replacement cycle for new glasses.
  4. “Potential shifts in customer spending on optical visits/new glasses away from key seasonal periods, including back-to-school. [That] could imply risk to other high volume periods, including tax-return season in the first half of 2022.
  5. “Rising labor and marketing costs could pressure the 2022 Ebitda margin outlook.”

National Vision shares recently traded at $51.58, down 2.9%. They've traded on Friday off as much as 5.9% at $50.01. They've come off a 52-week high $65.92, set on Nov. 5.

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The Duluth, Ga., company reported third-quarter earnings on Wednesday. Net income totaled $41 million, or 45 cents a share, up from $35.3 million, or 42 cents, in the year-earlier quarter. The FactSet analyst consensus called for 21 cents in the latest quarter.

Net revenue jumped 20% to $518 million from $485 million a year earlier. Analysts forecast $512.3 million for the latest quarter.

For fiscal 2021 the company estimates adjusted profit at $1.28 to $1.33 a share, compared with the FactSet consensus estimate of $1.32 a share. It pegs revenue at $2.04 billion to $2.06 billion against the estimate of $2.06 billion.

Meanwhile, Warby Parker  (WRBY) - Get Warby Parker, Inc. Class A Report shares climbed Friday after the online eyewear retailer posted a wider-than-expected third-quarter loss but beat Wall Street's sales estimates.