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Bank Of America Sees Upside In Dick's Sporting Goods, Upgrades To Buy

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Bank Of America Sees Upside In Dick's Sporting Goods, Upgrades To Buy

Bank of America analysts downgraded Dicks Sporting Goods Inc (NYSE: DKS) to Neutral in August, but the research firm now sees three reasons to turn bullish again on the retailer.

The Analyst

Robert Ohmes upgraded Dicks Sporting Goods from Neutral to Buy with a price target lifted from $43 to $55.

The Thesis

The case for turning bullish on Dicks' stock is based in part on expectations for recent success of its premium footwear decks to continue into next year, Ohmes wrote in the note. The company's premium footwear deck is found in 250 stores today and could expand to another 100 locations next year.

Second, Dicks' Yeezy launch in September was a "big success" as the company sold a notable amount of shoes within hours of launch, the analyst wrote. In fact, the company's second Yeezy launch resulted in the sale of every last shoe.

Third, the broader apparel category continues to perform well across multiple brands. Nike's sportswear products remain a strong seller while adidas is enjoying continued momentum. In addition, Dicks' private label expansion is seeing a "strong response" from consumers.

The research firm's revised $55 price target is based on a multiple of around 15 to 16 times fiscal 2021 EPS of $3.55. This represents a premium to the stock's 10-year historical average of 14 times and justified amid expectations for same-store sales momentum to accelerate.

Price Action

Shares of Dicks Sporting Goods flat at time of publication Monday.

Related Links

Barclays Starts Coverage Of US Specialty Retail

Wall Street Stays Neutral On Dicks Sporting Goods Amid Potential Exit From Hunting Category

Latest Ratings for DKS

DateFirmActionFromTo
Dec 2019Initiates Coverage OnEqual-Weight
Nov 2019MaintainsNeutral
Nov 2019MaintainsEqual-Weight

View More Analyst Ratings for DKS
View the Latest Analyst Ratings

Posted-In: Apparel Bank of America retail Robert OhmesAnalyst Color Upgrades Price Target Analyst Ratings

 

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