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Dick's Sporting Goods' Long-Term Strategy on Track - BofA

Stock Markets Aug 19, 2022 13:36
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By Sam Boughedda

Dick's Sporting Goods (NYSE:DKS) price target was raised to $125 from $105 per share by a BofA analyst on Friday. The analyst reiterated a Buy rating.

With the company scheduled to report second-quarter results on Tuesday, August 23rd, BofA sees a potential downside risk to the consensus EPS of $3.57 (vs. our $3.31).

This is due to: "(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."

In addition, the analyst said BofA's alternative data suggest a deceleration in same-store sales for the company.

However, the firm raised its price target on the stock based on higher sector multiples. In addition, they reiterated a Buy rating as they believe the company's sales and margins have been "structurally rebased at higher levels vs. 2019."

"DKS has established itself as the omni-channel leader in most of its categories with overall digital sales now in line with overall company profitability," explained the analyst. He added that "DKS has implemented a more sophisticated promotional strategy to drive merchandise margin growth, with 'targeted' vs. storewide promos & use of more efficient clearance channels."

Dick's Sporting Goods' Long-Term Strategy on Track - BofA
 

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