ASO - Dick's Sporting Goods rallies to all-time high and lifts peers after sizzling holiday quarter report

2023-03-07 14:21:52 ET

Dick's Sporting Goods ( NYSE: DKS ) rallied 9.52% in afternoon trading on Tuesday and carved out a new all-time high of $146.89 along the way.

On Wall Street, firms bullish on Dick's ( DKS ) pounded the table that the rally may not be over. Morgan Stanley analyst Simeon Gutman said Dick's ( DKS ) margins and EPS are normalizing at higher levels with solid market share gains providing support. While there are still some questions on where gross/EBIT margins level out, DKS is said to be proving it can punch in a higher weight class in the retail sector. The firm kept an Overweight rating on DKS following the print with the athletic retailer seen as structurally mispriced considering the compelling risk-reward profile.

Bank of America also stayed bullish on Dick's ( DKS ) with a Buy rating and price objective of $145 reiterated following what it called strong F4Q results. The firm was impressed with the inventory updated from Dick's and noted the FY24 guidance is well ahead of consensus marks. Analyst Robert Ohmes and team believe DKS remains an underappreciated transformation retailer.

Barclays had a similar theme with its view that the holiday quarter proved that Dick's ( DKS ) could drive conversion and traffic despite a promotional stance during holiday. Analyst Adrienne Yih also pointed to inventory moving in the right direction and a better setup later this year. "DKS has two more difficult full-price compare quarters in 1H23, where they were largely non-promotional, but in 2H23 we see opportunity for merchandise margin expansion as they anniversary inventory liquidation actions," she noted.

Sector watch: Hibbett Sports ( HIBB ) gained 4.20% , Sportsman's Warehouse ( SPWH ) shot up 4.70% , Academy Sports and Outdoors ( ASO ) rose 2.35% , and Big 5 Sporting Goods ( BGFV ) notched a 0.80% gain.

Read details on the Dick's Q4 earnings report.

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