Dick's Sporting Goods

Morgan Stanley Lifts Dick’s Sporting Goods Price Target to $115

Morgan Stanley raised their stock price forecast on Dick’s Sporting Goods to $115 from $93 and said that it is driven entirely by a 30% increase in ’22 EPS estimate of $7.60.

Late last month, Dick’s said its fiscal first-quarter net income rose to $361.8 million, or $3.41 per share, from a loss of $143.4 million, or $1.71 per share, a year earlier. The company said its adjusted earnings per share (EPS) of $3.79 per share, beating the Wall Street consensus estimates of $1.12 per share.

The Coraopolis, Pennsylvania-based company said its revenue surged 119% to $2.92 billion, beating estimates for $2.18 billion. On a two-year basis, sales were up 52%.

“We are ‘Overweight’ rated. We see Dick’s Sporting Goods (DKS) as a structurally higher-margin business with faster growth post-COVID-19. This warrants a mid to high-teens multiple in our view. Raising price target to $115,” noted Simeon Gutman, equity analyst at Morgan Stanley.

Dick’s Sporting Goods shares rose over 70% so far this year.

Twenty analysts who offered stock ratings for Dick’s Sporting Goods in the last three months forecast the average price in 12 months at $103.22 with a high forecast of $142.00 and a low forecast of $78.00.

The average price target represents a 5.90% increase from the last price of $97.47. Of those 20 equity analysts, 11 rated “Buy”, eight rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the bull-case scenario target price of $150 and the worst-case scenario forecast of $60.

Dick’s Sporting Goods (DKS) is in a favorable position given its category dominance, industry tailwinds, and healthy balance sheet. Its outlook within the category is likely to be even stronger post-COVID-19. We see a positive risk/reward skew based on our view the earnings power of the business is underappreciated. Key drivers include merchandise margin expansion and capital return (buybacks). We think there is upside for the stock without underwriting a higher valuation multiple as a result,” Morgan Stanley’s Gutman added.

“The stock’s multiple has not broken out like it has for other retailers in our space which should emerge stronger post-COVID-19. The potential for multiple expansion adds optionality/upside to the bull case.”

Other equity analysts also recently updated their stock outlook. Stephens raised the target price to $95 from $74. CFRA lifted the price target by $30 to $110. UBS upped the price target to $107 from $90.

Telsey Advisory Group increased the price target to $113 from $98. Wedbush lifted the target price to $110 from $97. Stifel lifted the target price to $98 from $71. Citigroup raised the price target to $128 from $90.

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