On Tuesday, Baird adjusted its price target for Dick's Sporting Goods (NYSE:DKS), increasing it to $185 from the previous $145, while maintaining a Neutral rating on the stock. The firm's analyst pointed to the company's fourth-quarter earnings expectations as being attainable and suggested that the initial fiscal year 2024 guidance could align with the consensus.
The analyst noted that Dick's Sporting Goods shares have experienced a significant uptick in recent months, which creates a high bar for the company in the near term, especially as they approach their earnings report.
Despite the recent price surge, the stock is still considered relatively inexpensive, trading at approximately 14 times the estimated Street earnings per share for fiscal year 2024, compared to a pre-pandemic five-year average of around 13 times.
The firm acknowledges the impressive market share gains and structurally higher margins and return on invested capital (ROIC) that Dick's Sporting Goods has demonstrated. These factors contribute to Baird's continued positive outlook on the retailer. However, the firm indicates caution against pursuing the stock at its current price level, suggesting that the recent re-rating of the stock might warrant a more conservative approach for the moment.
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