Dick's Sporting Goods' Structural Drivers Prompt This Analyst Boost Price Target By 22% - Dick's Sporting Goods (NYSE:DKS)

Morgan Stanley analyst Simeon Gutman reiterated an Overweight rating on the shares of Dick's Sporting Goods DKS and raised the price target from $135 to $165.
There are few examples of retailers that have successfully changed their sales/margin profiles, and DKS could be one of the rare few, the analyst said.
If DKS retains the majority of its COVID-driven sales and margin gains, the stock screens with among the best risk/rewards in Retail, added the analyst.
The company has a history of uneven sales growth and margins, and operates in a category that was a significant COVID beneficiary.
The changes the company made, including improved product assortment, digital and personalized marketing, stronger omnichannel capabilities, and a cultural shift, should lead to a faster-growing, more profitable business.
The sporting goods category could grow faster going forward as sports participation appears to be holding in stronger for longer and reversion off COVID gains so far has been benign.
Per third party data, there is increasing evidence DKS's customers are stickier across in-store and online channels and its higher-income household penetration has increased more so than key peers versus 2019.
The analyst's bull case is based on the fact that the Sporting Goods category grows at a faster rate post-COVID, DKS gains share vs. core peers, and EBIT margins expand to ~15% over time.
Meanwhile, the analyst specified that the potential for a near-term sales/margin reversion continues to be the key risk to the stronger for longer narrative.
Also Read: Dick's Sporting Goods To $140? These Analysts Raise Price Targets On The Sporting Goods Retailer Following Earnings Beat
Price Action: DKS shares are trading higher by 0.25% at $128.40 on the last check Monday.
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