Can Dick's Sporting Goods Break Possible Headwinds? 2 Analysts Weigh In

Dick’s Sporting Goods Inc DKS reported its quarterly revenues and earnings higher than Street expectations but lowered its financial outlook for the year.

Raymond James On Dick’s Sporting Goods: Analyst Bobby Griffin maintained a Market Perform rating for the company.

Management has achieved a significant improvement in profitability over the past couple of years and Dick’s Sporting Goods delivered solid results for the latest quarter, Griffin said in a note to clients.

“That said, we are lowering our FY22 comps and earnings estimates to reflect a greater likelihood that inflation headwinds will hinder both consumer demand and profitability in the coming quarters, particularly in a historically discretionary category (sporting goods and apparel/footwear),” he wrote.

Although the stock has declined over the past few months, “we remain on the sidelines for now due to DKS facing very tough compares in FY22, our concerns for discretionary demand in a rapid inflationary environment, and potential for industry-wide promo activity to turn more normalized,” he added.

Telsey Advisory Group On Dick’s Sporting Goods: Analyst Joseph Feldman reiterated an Outperform rating for the company, while lowering the price target from $125 to $110.

“We were surprised by the magnitude of Dick's Sporting Goods' 2022 guidance cut after a relatively strong 1Q22 performance,” Feldman said in a note.

“Dick's is experiencing higher-than-anticipated cost pressure in products, freight, and wages so far in 2Q22,” the analyst wrote. He further added the revision in the guidance “seems more the result of the company planning for more challenging trends through the year due to the softening economic environment and consumer sentiment, rather than a deterioration in its business trends.”

DKS Price Action: Shares of Dick’s Sporting Goods had risen by 7.18% to $83.75 at the time of publication Thursday.

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