The downgrade comes ahead of the company’s fourth-quarter results in mid-March. Recently, a large number of leading sporting goods manufacturers and retailers reported results lower than expectations.
Holiday 2016 sales were dampened due to unfavorable weather, disruptions in replenishment and generally weak demand.
Against this backdrop, the brokerage noted that even the well-positioned Dick's Sporting Goods is unlikely to emerge from this sector headwind unscathed.
“The market continues to wager on the potential for improved sales and EPS growth at DKS in coming quarters. Hints of a setback in Q4 (Jan. 2017) or into FY17 (Jan. 2018) are likely to undermine near-term investor confidence in the DKS story,” analyst Brian Nagel wrote in a note.
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As such, Nagel cut his fourth quarter EPS forecast to $1.27 from $1.30 versus a current Street figure of $1.30 and management earnings guidance of $1.19–$1.31. The analyst also slashed his fiscal 2017 (Jan. 2018) EPS view to $3.62 from $3.75 versus current consensus estimate of $3.78.
Nagel also warned that more challenging comparisons loom for the company post fourth quarter. Comp sales comparisons step up to +2.8 percent in the second quarter (July) and +5.2 percent in the third quarter (October) as the company begins to lap the benefits of market share shifts that occurred in mid-2016.
Consequently, the analyst adopted a cautious stance despite acknowledging the fact that the company remains the preeminent market share taker in the sector following recent significant competitive fallout.
At last check, shares of Dick's Sporting Goods were up 0.64 percent at $50.07.
Latest Ratings for DKS
|Jan 2017||Goldman Sachs||Upgrades||Neutral||Buy|
|Nov 2016||Wedbush||Initiates Coverage On||Outperform|
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