Trump announces trade deal with EU following months of negotiations
On Thursday, TD Cowen made adjustments to its outlook on Dick’s Sporting Goods (NYSE:DKS), reducing the price target from $216.00 to $205.00, while maintaining a Hold rating on the company’s stock. The $14.35 billion sporting goods retailer, which has seen its stock decline 22.15% year-to-date, remains a subject of interest for investors. According to InvestingPro analysis, the company is currently trading at an attractive P/E ratio of 12.5x relative to its near-term earnings growth potential. The adjustment follows a comprehensive survey conducted by the firm, which indicated a gain in footwear market share and customer cross-shopping behaviors that could affect the company’s future performance.
The survey by TD Cowen revealed that Dick’s Sporting Goods has made notable strides in the footwear market, an area where they compete with retailers like Foot Locker (NYSE:FL). The data suggests that Dick’s Sporting Goods is gaining preference among sneaker shoppers, which is reflected in their strong comparative sales figures. Over a two-year period, Dick’s Sporting Goods reported a comp sales stack of +9.8%, with the first quarter showing a +4.5% increase, driven by both a +3.7% rise in average ticket prices and a +0.8% increase in transaction volume. Furthermore, gross margin expanded by +40 basis points in the first quarter, supported by a higher merchandise margin.
The report also highlighted the company’s financial performance, with Dick’s Sporting Goods delivering a non-GAAP EPS of $3.37 in the first quarter, surpassing market expectations. The company maintains strong fundamentals with a gross profit margin of 35.9% and steady revenue growth of 3.53%. InvestingPro subscribers have access to over 12 additional key metrics and exclusive analysis that could help evaluate the company’s true potential. This result stands in contrast to the performance of Foot Locker, which according to the survey, experienced a decline in sneaker preference share, dropping from a low-20% level to a mid-to-high-teens percentage. This represents a significant contraction of approximately 300 to 400 basis points.
Additionally, the cross-shopping analysis provided by TD Cowen indicated an interesting dynamic between the two retailers. The survey found that 62% of Foot Locker’s brick-and-mortar shoppers also patronize Dick’s Sporting Goods stores. Conversely, only about one-third (approximately 37%) of Dick’s Sporting Goods’ brick-and-mortar shoppers frequent Foot Locker stores.
Despite the positive indicators and the confidence in a gross margin improvement in the second half of the year, even in the face of tariffs, TD Cowen’s revised price target reflects a cautious stance due to the uncertainties looming in the latter half of the year. The firm’s decision to reiterate a Hold rating indicates a watchful approach to Dick’s Sporting Goods stock amid the evolving retail landscape. Notably, the company maintains a strong dividend yield of 2.74% and has consistently paid dividends for 15 consecutive years, demonstrating its commitment to shareholder returns despite market volatility.
In other recent news, Dick’s Sporting Goods has reported strong first-quarter 2025 results, with a notable 4.5% increase in comparable store sales and earnings per share of $3.37. The company has maintained its fiscal year 2025 EPS guidance of $13.80 to $14.40, despite facing higher-than-expected tariffs. Analysts from Citi and DA Davidson have highlighted the company’s solid performance, with Citi maintaining a Neutral rating and DA Davidson adjusting its price target to $230 while keeping a Buy rating. Morgan Stanley (NYSE:MS) also adjusted its price target to $232, maintaining an Overweight rating, citing the company’s strategic partnerships and customer engagement efforts.
The company’s recent acquisition of Foot Locker has been a focal point, with analysts expressing concerns about its integration strategy. Williams Trading’s analyst reiterated a Hold rating, noting potential distractions from the acquisition. Meanwhile, Truist Securities reduced its price target to $230 but reaffirmed a Buy rating, acknowledging the company’s competitive advantages and growth initiatives like the GameChanger program. The Court of International Trade’s decision to strike down certain tariffs also stands as positive news for Dick’s Sporting Goods, although the presidential administration plans to appeal the ruling. These developments indicate a complex landscape for Dick’s Sporting Goods as it navigates market challenges and opportunities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.