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How Wall Street Reacted to Dick’s Sporting Goods’ Q3 2018?

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Nov. 29 2018, Published 3:48 p.m. ET

Target price changes

After the announcement of its third-quarter results on November 28, we’ve seen three target price changes for Dick’s Sporting Goods (DKS). RBC increased target price for DKS to $38.00 form $36.00. Baird upped its price target to $40.00 from $39.00. However, J.P. Morgan cut its price target to $41.00 from $46.00 and lowered its rating to “neutral.”

Currently, analysts’ 12-month average target price for DKS is $39.00, which implies a 4.7% upside to its price on November 28.

Out of the 29 analysts covering Dick’s Sporting Goods stock, 24% recommend a “buy,” 72% recommend a “hold,” and 4% recommend a “sell.

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Dick’s Sporting Goods’ third-quarter sales of $1.86 billion missed analysts’ estimates of $1.88 billion. On a year-over-year basis, sales declined 4.5%. Weakness in the hunting and electronics categories and the calendar shift dented the top-line growth. However, EPS of $0.39 were better than the consensus estimate of $0.26. The EPS rose 30.0% year-over-year. A reduced tax burden supported the company’s bottom-line growth.

Given the mixed results, Dick’s Sporting Goods’ stock closed 2.6% higher on November 28. On a year-to-date basis, the stock price is up 29.6% year-to-date to $37.26.

Management is working on exiting the electronics category and reducing its exposure to the hunting category. It remains focused on growing digital sales and private brand sales. Management has upped its fiscal 2018 EPS guidance, owing to strong third-quarter bottom-line numbers.

Ratings for peers

Of the 23 analysts covering Foot Locker (FL), ~57% recommend a “buy” and 30% recommend a “hold.” There have been several price target revisions for Foot Locker since its third-quarter results. On November 21, Baird upped its price target on Foot Locker to $60.00 from $55.00. Telsey Advisory increased its target price to $60.00 from $58.00. The mean target price for Foot Locker is $58.57, which reflects a 4.2% upside to the stock price on November 28.

All of the analysts covering Big 5 Sporting Goods (BGFV) recommend a “hold.” The mean target price of $5.00, which indicates a 36.6% upside.

Of the 12 analysts covering Hibbett Sports (HIBB), 67% recommend a “hold” and 25% recommend a “sell.” Since the earnings announcement on November 27, we’ve seen many price revision changes for Hibbett Sports. On November 28, Baird lowered its price target to $20.00 from $22.00. Stifel cut its price target to $19.0 from $22.00. Analysts’ target price for the stock is $22.64, implying a 30.2% upside.

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