Tractor Supply's Removal of Long-Term Targets Resets Bar, Morgan Stanley Says

MT Newswires Live
07/24

Tractor Supply's (TSCO) removal of its long-term financial framework resets the bar and could present an opportunity for investor sentiment to improve paired with a more achievable framework, Morgan Stanley said in a note Friday.

The investment firm said there are three potential interpretations of the elimination of the targets, with the first two as the more likely outcomes.

In the first scenario, the long-term targets could return once industry conditions improve, but a recovery in sentiment could also benefit similarly exposed stocks and Tractor Supply would need to offer the best combination of sales acceleration, leverage, and valuation relative to peers, the firm said.

In the second scenario, the company recalibrates its operating structure to better align expenses with a structurally slower demand environment, but earnings call comments showed that Tractor Supply continues to position itself as a growth company, according to the note.

The third scenario, which Morgan Stanley described as the "most negative interpretation," sees fiscal 2027 as a transition year to reposition the business. Such a decision reflects not only macro uncertainty but also limited visibility into normalized earnings, the firm said.

Morgan Stanley lowered the price target on the stock to $35 from $45, with an equal-weight rating.

Price: 30.69, Change: +0.36, Percent Change: +1.20

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