Canaccord Genuity Believes DKS Won’t Stop Here

By Austin Angelo

Canaccord Genuity analyst Camilo Lyon reiterated a Buy rating on Dick’s Sporting Goods (NYSE: DKS) today and set a price target of $70. The company’s shares opened today at $59.40, close to its 52-week high of $61.94.

Lyon commented:

“We have been positive on DKS all year, largely due to the significant share gain opportunity it has from the TSA bankruptcy (and others). Heading into the Q3 report on Tuesday, Nov. 15, we continue to be bullish on DKS as this will mark the first quarter in which it will have realized the start of the share gain benefits. For reference, BGFV’s 6.8% Q3 comp implies that its stores in trade areas of a bankruptcy comp’d up DD in Q3 vs. LSD comps for stores in non-affected trade areas (roughly half the store base). We believe DKS should experience a similar benefit for its stores that had a TSA nearby. Moreover, we believe those gains will accelerate over time as consumers increasingly seek DKS out as their sporting goods solution. In addition, we believe the Chicago Cubs World Series win meaningfully added to both late Q3 and early Q4 comps (~100bp benefit potential). Lastly, the Golfsmith bankruptcy should at very least create a less promotional environment for Golf Galaxy while also adding the sales of the 30 stores it acquired. We recently raised our Q3 comp/EPS forecasts to 3.5%/45c vs. consensus at 2.8%/42c, yet we still see an opportunity for DKS to outperform our above-consensus estimates.”

According to TipRanks.com, Lyon is a 1-star analyst with an average return of -1.9% and a 45.5% success rate. Lyon covers the Consumer Goods sector, focusing on stocks such as Columbia Sportswear, Sequential Brands, and Deckers Outdoor.

Currently, the analyst consensus on Dick’s Sporting Goods is Strong Buy and the average price target is $66.33, representing an 11.7% upside.

In a report issued on November 2, Wedbush also initiated coverage with a Buy rating on the stock with a $65 price target.

Based on Dick’s Sporting Goods’ latest earnings report for the quarter ending July 31, the company posted quarterly revenue of $1.97 billion and quarterly net profit of $91.42 million. In comparison, last year the company earned revenue of $1.64 billion and had a net profit of $47.22 million.

Based on the recent corporate insider activity of 34 insiders, corporate insider sentiment is negative on the stock. Most recently, in August 2016, Michele Willoughby, the EVP, ECom and Supply Chain of DKS sold 36,737 shares for a total of $2,159,349.

Dick’s Sporting Goods, Inc. is a sporting goods retailer, which engages in offering brand name sporting goods equipment, apparel, and footwear. Its products include belt, gloves, hats, insoles, athletic tape, braces and support, cups and athletic supporters, action cameras, drones, metal detectors, backpacks and duffles, bedding and blankets, and luggage. The company was founded by Richard T. Stack in 1948 and is headquartered in Coraopolis, PA.