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Why Analysts Upgraded Dick’s Sporting Goods

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Feb. 20 2018, Published 9:35 a.m. ET

Why the upgrade?

On February 15, CFRA upgraded its rating on Dick’s Sporting Goods (DKS) to “hold” from “sell” and upped the price target to $34 from the $27 projected earlier, according to a MarketWatch report. The upgrade came because some brands that sell their merchandise at Dick’s Sporting Goods reported encouraging sales trends.

Dick’s Sporting Goods stock price was down marginally by 0.2% on February 15, 2018. On the same day, the company also hiked its quarterly dividend by 32%. On a YTD (year-to-date) basis, the stock is up 16.8% as of February 15 as against a 2.2% gain in the S&P 500 Index (SPX-Index). Currently, the majority of analysts that provide a recommendation on Dick’s have maintained a “hold” rating. As of February 15, 2018, of the 31 analysts covering the stock, 65% of analysts have recommended a “hold,” 26% recommended a “buy,” and the remaining 9% recommended a “sell.”

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Recent target price revision and rating change activity

On February 12, 2018, RBC raised its price target on Dick’s stock to $32 from $27. However, on February 5, 2018, Barclays slashed its rating to “underweight” from “equal weight” and cut its target price to $25 from the $33 projected earlier.

Dick’s is a prominent sporting goods retailer. However, the tough retail landscape and the arrival of online retailers and the resultant price wars have negatively impacted profit margins for retailers. Like all other brick and mortar retailers, the company is also investing in its digital channel as well as overhauling its stores to better meet customer demand. These moves are likely to boost long-term performance.

Currently, analysts’ 12-month average target price for Dick’s Sporting Goods stock is $35.00, which reflects a 4.3% upside to the stock price as of February 15, 2018.

Peer ratings

Out of 21 analysts covering Foot Locker (FL), 38% have provided a “hold” rating. Out of the 15 analysts covering Finish Line (FINL), ~67.0% have given the stock a “hold” rating. 57% of analysts have given a “hold” rating to Hibbett Sports (HIBB).

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