- Morgan Stanley analyst Simeon Gutman reiterated an Overweight rating on the shares of Dick's Sporting Goods DKS and raised the price target from $135 to $165.
- There are few examples of retailers that have successfully changed their sales/margin profiles, and DKS could be one of the rare few, the analyst said.
- If DKS retains the majority of its COVID-driven sales and margin gains, the stock screens with among the best risk/rewards in Retail, added the analyst.
- The company has a history of uneven sales growth and margins, and operates in a category that was a significant COVID beneficiary.
- The changes the company made, including improved product assortment, digital and personalized marketing, stronger omnichannel capabilities, and a cultural shift, should lead to a faster-growing, more profitable business.
- The sporting goods category could grow faster going forward as sports participation appears to be holding in stronger for longer and reversion off COVID gains so far has been benign.
- Per third party data, there is increasing evidence DKS's customers are stickier across in-store and online channels and its higher-income household penetration has increased more so than key peers versus 2019.
- The analyst's bull case is based on the fact that the Sporting Goods category grows at a faster rate post-COVID, DKS gains share vs. core peers, and EBIT margins expand to ~15% over time.
- Meanwhile, the analyst specified that the potential for a near-term sales/margin reversion continues to be the key risk to the stronger for longer narrative.
- Also Read: Dick's Sporting Goods To $140? These Analysts Raise Price Targets On The Sporting Goods Retailer Following Earnings Beat
- Price Action: DKS shares are trading higher by 0.25% at $128.40 on the last check Monday.
- Photo Via Wikimedia Commons
DKSDick's Sporting Goods Inc
$189.51-%
Edge Rankings
Momentum
40.07
Growth
42.96
Quality
93.94
Value
65.70
Price Trend
Short
Medium
Long
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