Analyst: Dick's Sporting Goods Set For Strong 2018 With New Product, Strategic Investments

Dick's Sporting Goods INC DKS could see strong 2018 sales as a result of greater product innovation, investment in efficiency and lower inventory levels. 

The Analyst

Analyst Joseph Feldman upgraded Dick’s Sporting Goods from Market Perform to Outperform and raised the price target from $25 to $42, implying a 20.1-percent upside.

The Thesis

Greater product innovation in the sporting goods market will be a key driver of sales at Dick’s this year, Feldmnan said in a Thursday note.

Many of Nike Inc NKE's new products including VaporMax, Zoom Vaporfly, React and Shox models will be available through Dick’s stores, which will drive strong customer traffic as Nike sees sales growth in 2018, the analyst said. International sporting events such as the Winter Olympics and World Cup are also expected to drive consumer demand for sports apparel in 2018.

Dick’s private brand products offer a point of differentiation and are expected to contribute to additional sales, Feldman said. 

Dick’s has also made strategic investments such as exclusive products through the private brand portfolio; the introduction of a price match guarantee system; expansion of the ScoreCard customer loyalty program; and the addition of additional in-store labor and technology, according to Telsey Advisory Group. 

Feldman said he expects inventory levels to drop throughout the year, as vendors such as Nike have spoken about narrowing distribution for differentiated retailers.

Price Action

At the time of publication, shares of Dick's were down 1.65 percent at $33.28. 

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