Dick’s Sporting Goods stock target cut to $258 by TD Cowen

On Wednesday, TD Cowen maintained a Buy rating on Dick’s Sporting Goods (NYSE:DKS) shares but reduced the price target from $294.00 to $258.00. The adjustment comes as the firm anticipates a shift in the company’s financials, including lower free cash flow (FCF) estimates due to increased capital expenditures and higher inventory days on hand (DOH).

John Kernan, an analyst at TD Cowen, remains bullish on the company’s prospects, particularly highlighting the same-store sales (SSS) contributions from the House of Sport and Fieldhouse stores. This optimism is supported by InvestingPro’s Financial Health Score of 2.68, indicating GOOD overall financial condition. Despite the revised price target, the analyst expects better earnings before interest and taxes (EBIT) flow through to begin in the second half of the year. Kernan’s earnings per share (EPS) estimates are now slightly above the company’s guidance, with current diluted EPS at $14.00, acknowledging a somewhat second-half-weighted EBIT/EPS guide that does not include tariffs.

Kernan noted that Dick’s Sporting Goods is building a more durable and competitive business, serving athletes effectively. He pointed out that key softlines vendors, including Nike (NYSE:NKE), which accounts for 24% of sales, are offering a greater depth of products, and that the innovation cycle is improving. Dick’s private label is also expected to continue providing a merchandising margin tailwind, now contributing 700 basis points to 800 basis points more in margin compared to the previous 600 basis points to 800 basis points.

The analyst’s $258 price target is based on 17 times the fiscal year 2026 estimated EPS and 10 times the enterprise value/EBITDA. The company’s current P/E ratio of 13.42 suggests attractive valuation levels relative to growth prospects. Kernan also believes that Dick’s Sporting Goods can grow its dividend at a 10% compound annual growth rate over the next five years, with free cash flow reaching $1.5 billion by fiscal year 2028. This aligns with the company’s strong dividend track record, having maintained payments for 15 consecutive years. These projections are part of the rationale behind maintaining the Buy rating despite the lowered price target. Get access to 12 more exclusive InvestingPro Tips and comprehensive analysis for DKS.

In other recent news, Dick’s Sporting Goods reported robust fourth-quarter results, with net sales reaching $3.894 billion, surpassing both Stifel’s projection and Wall Street’s consensus. Despite strong sales, the company faced lower-than-expected earnings per share (EPS), reported at $3.62, slightly below Stifel’s estimate. The company’s guidance for fiscal year 2025 projects revenue between $13.6 billion and $13.9 billion, with EPS guidance set at $13.80 to $14.40, indicating a cautious outlook. Several analysts have adjusted their price targets for Dick’s Sporting Goods, with Truist Securities lowering their target to $245 while maintaining a Buy rating, and Stifel reducing their target to $226, keeping a Hold rating.

Williams Trading also revised its price target to $243, maintaining a Buy rating, citing potential for better-than-expected performance despite a conservative outlook. Telsey Advisory Group adjusted its target to $250, maintaining an Outperform rating, emphasizing the company’s strategic growth initiatives. Raymond (NSE:RYMD) James reaffirmed a Market Perform rating, noting the strong holiday period comps and strategic investments in new store formats. Analysts highlight that Dick’s Sporting Goods’ strategic initiatives, such as the expansion of its House of Sport and Field House concepts, are expected to drive future growth, despite current cautious guidance.

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