B. Riley Goes Neutral On Dicks Sporting Goods: Here's Why

• Shares of Dicks Sporting Goods Inc DKS have declined 31.7 percent over the past six months, falling to a low of $36.18 on Thursday.
• B. Riley’s Mitch Kummetz has initiated coverage of the company with a Neutral rating and price target of $41.
• Kummetz expressed concern regarding potential risk to the Q4 guidance, driven by unfavorable weather conditions.

Analyst Mitch Kummetz mentioned that Dicks Sporting Goods’ sales and EPS were currently tracking behind the financial growth rate targets for 2017.

On the other hand, the unit growth opportunity for the company suggests that there could be an increase of more than 71 percent from Dicks Sporting Goods’ current store count.

In addition, the Golf segment, which was a drag on the company’s performance for a large part of the last more than two years, no longer appears to be a headwind, while the transition of ecommerce to the in-house platform is expected to lead to cost savings by 2017.

Kummetz also stated that the underlying athletic trends continue to be generally favorable, and although the stock is currently trading below its normal valuation levels, there was unlikely to be further downside.