Dick's Sporting Goods Shocks Investors — 4 Analysts Slash Forecasts

Shares of Dick's Sporting Goods Inc DKS tanked in early trading on Wednesday, after the company slashed its guidance.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Stifel On Dick's Sporting Goods 

Analyst Jim Duffy maintained a Hold rating, while reducing the price target from $141 to $123.

Dick's Sporting Goods reporting an earnings miss in the second quarter “is a break from character after 12 straight quarters delivering upside,” Duffy said in a note.

“The -$0.87 miss and FY23 guidance reduction of -$1.45 at the midpoint reflects shrink (detected after annual inventory count) and actions to align outdoor apparel,” the analyst wrote. “Sudden acknowledgment of shrink as a key margin headwind is concerning, and shrink represents a headwind into FY24,” he added.

Telsey Advisory Group On Dick's Sporting Goods

Analyst Joseph Feldman reiterated an Outperform rating, while slashing the price target from $160 to $140.

“Dick's ~10% cut to its 2023 guidance came as a surprise after the company reiterated its outlook in May when most of its peers lowered,” Feldman stated. “Higher markdowns and inventory shrink—not lower sales or less demand—were the cause of the cut,” he added.

“While the markdowns seem contained to outdoor, they also point to Dick's not being immune to the promotional activity that is prevalent across the sector,” the analyst further wrote.

Check out other analyst stock ratings.

Morgan Stanley On Dick's Sporting Goods

Analyst Simeon Gutman reaffirmed an Overweight rating, while trimming the price target from $175 to $150.

The company’s EBIT margins are likely to “normalize at a higher level post-COVID, at 10.8% in '25e,” Gutman said.

He added that margins could improve because Dick's Sporting Goods “is continuing to take share and hold its sales base” and the company has made “several structural changes to its operating model.”

Oppenheimer On Dick's Sporting Goods
Analyst Brian Nagel maintained an Outperform rating, while reducing the price target from $175 to $145.

“DKS shocked investors, reporting much messier-than-expected Q2 (Jul.) trends and lowering meaningfully guidance for FY23 (Jan. 2024),” Nagel wrote in a note.

While the “abruptness” of margin pressure at Dick's Sporting Goods is disappointing, the issues seem “one-time-ish” and “externally fueled,” the analyst stated. He added that the “underlying trends and strategic development” at the company remain intact.

DKS Price Action: Shares of Dick's Sporting Goods were down 2.4% to $108.77 at the time of publication Wednesday.

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