Dick's Sporting Goods Emerges As A Promising Buy: Analyst Cites Strong Ties With Nike, On Holding & More

Truist Securities analyst Joseph Civello initiated coverage on Dick's Sporting Goods Inc DKS with a Buy rating and a price target of $134.

The analyst notes Dick's Sporting Goods shares are down (~22%) since 2Q23 EPS (vs. a ~flat S&P 500), which presents a compelling buying opportunity for the largest sporting goods retailer in the U.S.

Investors are undervaluing key structural improvements that the company has made since 2019 due to NT industry pressures, the analyst adds.

After years of focusing primarily on growing their DTC channels, many sports apparel/footwear vendors are once again leaning into wholesale opportunities. 

Also See: Sportswear Company Under Armour Slashes FY24 Topline Outlook: Here's Why

Nike, Inc. NKE continues to highlight the importance of its Dick's partnership (including their shared membership), which will only expand as the company appears to be moderating some of its near-term DIY-penetration targets, the analyst notes.

Further, On Holding AG ONON and HOKA have both spoken about their strong and growing relationships with Dick's even as they limit door exposure elsewhere, the analyst adds.

According to the analyst, Dick's is in the catbird seat to be the premier retail partner in sports apparel/footwear, due to its leading scale and the premier shopping experience it offers (especially at remodeled locations and its high-end House of Sport locations).

Given the above, the analyst's EPS estimate for FY23 is $11.95, while that for FY24 is $12.45.

Also Read: Sharp Inventory Reduction Pushes Adidas Revenue; Gets €350M Boost From Yeezy Sales

Price Action: DKS shares are trading higher by 2.91% to $118.71 on the last check Friday.

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