Oppenheimer shrugged off any concerns on slowing consumer spending impacting Dick's Sporting Goods ( NYSE: DKS ) with an outlier upgrade on the retailer to an Outperform rating from Perform. The high majority of recent analyst actions with retail chains has been downgrades to a more cautious stance.
"We look upon fundamental underpinnings of athleisure and sporting good retail as solid, if not strengthening, and view investor sentiment toward the spaces as generally overly pessimistic," noted analyst Brian Nagel.
Nagel pointed out that recent commentary from NKE and other apparel sellers indicates continued underlying, broad-based strength in consumer demand. Importantly, data suggests that supply chain challenges are now abating. Oppenheimer said it is optimistic that inventory rationalization efforts now underway should prove transitory and well managed.
In summary, Oppenheimer said a better-positioned Dick's ( DKS ) is likely to continue to capitalize on positive post-pandemic shifts.
Oppenheimer set a 12-month to 18-month price target of $138 on DKS. At current levels, DKS trades at just 12X-14X the firm's assumed recession earnings case for the company.
Shares of Dick's ( DKS ) moved up 3.01% in premarket trading to $112.39.
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Dick's Sporting Goods is upgraded at Oppenheimer in outlier bull call for retail