Dick's Quarter Was A 'Victim Of High Expectations,' Morgan Stanley Says

In a report published Wednesday, Morgan Stanley analysts maintained an Equal-Weight rating on

, after the company's shares came under pressure following the 1Q results. Dick's reported its Q1 EPS in-line with expectations, albeit with weaker comps and gross margin, which were offset by lower SG&A. "While these results do little to detract from the longer term story, expectations had been rising into the print," the analysts said, while adding that the company's stock has outperformed year-to-date, having risen 13 percent versus a 3 percent rise in the SPX. While the company's Q1 sales "could have been better," the analysts believe "there will be evidence of this in coming quarters." In the report Morgan Stanley noted, "We view the story as growth at a reasonable price and heard nothing today that detracts from our thesis. In general, DKS seems to be executing well as it continues its omni-channel investments and prepares to internalize e-commerce operations by 2017." The analysts believe Dick's risk/reward "continues to skew positive, with today's weakness amplifying the upside." They expect a near-term bounce back, with Q2 guidance appearing "conservative."