Dick's Sporting Goods May Already Be Getting A Lift From The Sports Authority's Demise

Following its meeting with the management of Dicks Sporting Goods Inc DKS, JPMorgan said it already believes the company is getting a significant lift from The Sports Authority (TSA)'s demise. The firm also noted that management expects the benefits to accelerate into the fourth quarter and 2017, as the company leverages purchased intellectual property.

Analyst Christopher Horvers said his comp forecasts for the third quarter of 3 percent and fourth quarter of 5.2 percent are ahead of the Street. The third quarter upside, according to the analyst, comes from TSA's liquidation in the second quarter and the Olympics lift. Meanwhile, the combination of weather comparisons and targeted TSA share strategies would boost the fourth quarter.

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JPMorgan also said it did not come off the management meeting doubting that the company's estimate of 25-30 basis point margin benefit from in-sourcing e-commerce operations in 2017 is achievable.

The Neutral rating on the shares of the company is due to the fact that the market expectations of the TSA lift is more than that of the firm's. That said, the firm sees a high penetration of tactical investors positioned for the double benefit of TSA's demise and lapping the warmest winter weather in 120 years in the fourth quarter to the first quarter.

The firm has a December-2017 price target of $60, unchanged from the December-2016 price target.

At time of writing, shares of Dick's were down 0.57 percent at $57.79.

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