Argus Raises Dick's Sporting Goods Price Target, Expects Market Share Gains

Argus’ Christopher Graja expects Dicks Sporting Goods Inc (NYSE: DKS) to gain market share due to the bankruptcy of The Sports Authority.

Graja reiterated a Buy rating on the company, while raising the price target from $52 to $66.

Growth Expectations

The analyst also expects the company to “deliver outsized EPS growth next year as a result of current investments in e-commerce and customer service.”

Graja continues to believes Dick's has the opportunity as well as the financial flexibility to increase its full-line store base, expand the profitability and size of its e-commerce business and expand the overall operating margin.

Market Share Gains

Dick's also has potential to gain market share, driven by the company’s focus on innovative and exclusive merchandise to improve athletic performance, its “unique” store environment that includes specialty “shops” within the store and the comprehensive customer service.

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According to the Argus report, “Margin expansion is likely to be aided by increased sales of exclusive merchandise, a shift in the merchandise mix to higher-margin apparel and footwear, the expanded use of technology in inventory management, and efforts to tailor stores to regional markets and improve vendor relationships.”

Following the beat earnings for Q2 and the FY17 guidance, the EPS estimates for FY17 and FY18 have been raised.

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