Retail

Why Analysts Are Taking a Back Seat on Dick's Sporting Goods

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Dick’s Sporting Goods Inc. (NYSE: DKS) shares cratered over the past week, hitting a low not seen since 2010. All this came after the company reported its most recent quarterly results on Tuesday. Dicks seems to be catching the worst of the retail trend, and analysts couldn’t agree more. Practically any firm covering Dick’s chopped its price target in response to these atrocious earnings.

24/7 Wall St. has included some brief highlights from the earnings report, as well as what analysts are saying about the sporting goods retailer after the report.

Dick’s posted $0.96 in earnings per share (EPS) and $2.16 billion in revenue, versus consensus estimates from Thomson Reuters that called for EPS of $1.01 and $2.16 billion in revenue. In the same period of last year, Dick’s posted $0.82 in EPS and revenue of $1.97 billion.

Its e-commerce sales for the second quarter of 2017 increased roughly 19%, and e-commerce penetration for the quarter was 9.2% of total net sales.

Unsurprisingly, like many other retailers this sporting goods chain has been beaten up this year, but it seems to be doing the worst out of the group. The stock fell about 21% over the course of the week, making a total decline of 49% in 2017 alone, or a decline of about 54% looking back over the past 52 weeks. This is truly an industry in peril, but it seems that sporting goods retailers may be facing larger obstacles than others in the retail space.

What makes this particular type of store vulnerable is the products that it sells. In a pinch, customers could go to Walmart for some of the goods needed or even order them online. On the other hand, if customers want a more personalized or boutique shopping experience, they can go to a specialty golf shop or something similar.

Also the companies that supply products to Dick’s, such as Nike or Adidas, supply to a laundry list of other stores as well.

In recent years, we saw Sports Authority go bankrupt. Will Dick’s face a similar fate?

Here’s what analysts had to say about Dick’s:

  • Morgan Stanley reiterated an Equal Weight rating but dropped its price target to $30 from $55.
  • Forward View downgraded it to a Sell rating from Buy.
  • Barclays reiterated an Equal Weight rating and cut its price target to $30 from $46.
  • BMO Capital Markets has an Outperform rating and lowered its price target from $62 to $37.
  • Goldman Sachs downgraded it to Neutral from Buy and cut its price target to $30 from $49.
  • Susquehanna reiterated a Neutral rating and dropped its price target from $57 to $30.
  • Guggenheim reiterated a Neutral rating.
  • Buckingham Research downgraded it to a Neutral rating.
  • Monness Crespi & Hardt downgraded it to Neutral from Buy.
  • Citigroup downgraded it to Neutral from Buy with a $30 price target.
  • RBC downgraded it to Sector Perform from Outperform and lowered its target to $29 from $46.
  • Deutsche Bank downgraded it to Hold from Buy and cut its price target from $50 to $28.
  • MKM downgraded it to Neutral from Buy and lowered its price target to $30 from $47.
  • Wedbush downgraded it to Neutral from Outperform with a $29 price target.
  • Cannaccord Genuity downgraded it to a Hold from Buy and lowered its target to $27 from $52.
  • Oppenheimer reiterated a Hold rating.
  • Merrill Lynch downgraded it to a Neutral rating from Buy with a $35 price target.
  • Stifel downgraded it to Hold from Buy and lowered its price target from $54 to $28.

Shares of Dick’s were last seen at $26.99, with a consensus analyst price target of $31.56 and a 52-week range of $26.32 to $62.88.

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