BofA Says Dicks Sporting Goods Is Still A Buy

WHAT YOU SHOULD KNOW

There is a potential downside risk to the consensus EPS of $3.57 for Dick’s Sporting Goods
An analyst said that BofA’s alternative data suggest that the company’s same-store sales are slowing down.

BofA analyst raised Dicks Sporting Goods (NYSE: DKS) price target to $125 per share from $105 on Friday.

The analyst said there is a potential downside risk to the consensus EPS of $3.57 for Dicks Sporting Goods due to a deceleration in same-store sales. However, the firm raised its price target on the stock based on higher sector multiples.

The potential reasons are: “(1) alternative data including geolocation store foot traffic & web traffic suggests a deceleration in same-store sales from F1Q (-8.4%) vs. consensus expectations for a sequential acceleration (- 6.5%); (2) our channel checks & web data suggests an uptick in both online & in-store promos vs. last year & F1Q, especially in women’s apparel & Solitary Leisure categories (e.g., Fitness & Fishing) which could pressure merchandise margins.”

The analyst said that BofA’s alternative data suggest that the company’s same-store sales are slowing down. Due to a high number of sales and margins, the firm has decided to reiterate DKS as a buy.

Further comments from the analyst are: “DKS has established itself as the omnichannel leader in most of its categories with overall digital sales now in line with overall company profitability. DKS has implemented a more sophisticated promotional strategy to drive merchandise margin growth, with ‘targeted’ vs. storewide promos & use of more efficient clearance channels.”

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