Dick's Sporting Goods (NYSE: DKS) managed to capture the attention of CRT, which initiated coverage on the company with a $65 price target this morning. Sterne Agee analyst Sam Poser is out also with a Buy rating on Dick's along with a $64 price target. Aside from the typical excuse this year regarding the dampened action because of the weather, Dick's remains in Poser's positive light.
Commenting on key life-style product performance Poser states "The strength of athletic footwear and active & outdoor apparel (given the cooler weather) will more than offset the weakness in golf"
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CRT analyst Michael Gunther wrote in the report, "we believe the stock has further upside potential considering a normalized EPS growth profile of 15%+ and a current PEG ratio of less than 1.0x." The research firm is also looking for Dick's to reach 10.5 percent operating margins by 2017, up from the nine percent reported in 2012.
Much of the street fears the golf segment being a drag on Dick's, which Gunther claims is already baked into same-store sales guidance which helps to offer multiples at "...~15x consensus 2015 EPS, below the historical average of 17x" Poser said. Poser's observation jives with Gunther's claim that there is "still significant upside ahead to both sales volumes and margins".
Dick's is currently trading down 0.63 percent at $52.44 in early afternoon trading.
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