Analysts On Dicks Sporting Goods: 'Pain Mostly Behind Us'

March 4, 2015

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Dicks Sporting Goods Inc (NYSE: DKS) faces pressure from winter weather and a West Coast port slowdown, but troubles from its golf and hunting segments are abating, analysts said Wednesday.

The Pittsburgh-based retailer was little changed Wednesday, closing at $55.98, after beating fourth-quarter expectations late Tuesday.

"They've almost fully dug out of the golf and hunting hole," said Deutsche Bank's Michael Baker, who raised his price target nearly 11 percent to $62 and maintained a Buy rating.

Golfing sales in the fourth quarter were off 7 percent, compared with 9 percent in the preceding period; Sales of guns and hunting gear, which crashed by a percentage in the high teens earlier in 2014, was down only slightly in the recent period.

"Most of the pain is behind us," Baker said.

Citi's Kate McShane raised her price target more than 12 percent to $62 and maintained a Buy rating.

The company plans to sharpen its focus on the stronger categories of athletic apparel and footwear, while its earnings prediction is "probably conservative," McShane said.

But Canaccord's Camilo Lyon maintained a Hold rating and said Dicks' plan to take over the operation of its e-commerce business from an outside vendor will require heavy investments that will weigh on earnings "for the next couple of years."

Lyon nonetheless raised his target on Dicks by 20 percent to $59 a share, and said he expects "continued momentum" in apparel and "a possible recovery" for golf and hunting.