Dick's Sporting Goods' Investment Spree Could Spoil The Game For Investors, Analyst Says

Dick's Sporting Goods, Inc. +5.48%

Dick's Sporting Goods, Inc.

DKS

221.65

+5.48%

BofA Securities analyst Robert F. Ohmes cut Dick’s Sporting Goods, Inc. (NYSE:DKS) price target to $225 (from $245) while reiterating a Neutral rating.

The price target change reflects the risk of more limited earnings upside this year as the analyst expects planned investment spending supporting the growth of House of Sport (+75-100 by 2027), Next Generation stores (+16 in 2024), and GameChanger (technology capabilities build-out) to weigh on occupancy and operating expenses.

The analyst cut the estimates for first-quarter adj. EPS to $2.85 (from $2.97) to reflect better SG&A pressures in the quarter, given brand campaigns, higher pre-opening and marketing expenses to support House of Sport openings, and continued shrink pressures on gross margin.

On the other hand, the analyst’s adjusted EPS estimate of $13.20 reflects modest SG&A leverage on cost management and business optimization actions completed in the fourth quarter.

Meanwhile, Ohmes sees impressive DKS House of Sport stores, all-time high-key brand partnerships, DKS vertical apparel brands (CALIA, VRST, DSG), and sourcing capabilities as tailwinds.

Also ReadDick’s Sporting Goods To Gain From Diverse Assortment Of National Brands, Rollout Of New Store Concepts: Analyst

Price Action: DKS shares are down 1.62% at $203.78 at the last check Monday.

Photo via Wikimedia Commons

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