Piper Jaffray Upgrades Dick's Sporting Goods (DKS) to Neutral; Increases Estimates & PT

October 19, 2009 7:55 AM EDT

Piper Jaffray upgrades Dick's Sporting Goods (NYSE: DKS) from Underweight to Neutral. Price target increased from $18 to $28.

Piper analyst says, "We are upgrading shares of DKS to Neutral based on our increased F09 and F10 EPS estimates. Our channel checks reveal strength in active apparel, team sports products, and footwear has shown strong sequential improvement from Q2 to Q3 driven by pent up demand for replacement products and colder weather year-over-year (see chart on page 2). While anniversarying strong gun and ammo sales from last year will be a headwind, we believe gross margin rate from favorable mix will also drive upside to estimates. Thus, we are increasing both our Q3 and Q4 comp estimates from -5% to 0% with the belief current sales trends are likely to continue into Q4. Recall on 8/20, DKS guided Q3 comps and EPS in the range of -6 to -4% and $0.04-0.07 on their Q2 earnings call and full year EPS to a range of $1.02 to $1.07. As a result of our increased comp estimates we are raising our Q3 and Q4 EPS estimate from $0.06 to $0.11 and $0.51 to $0.58. Thus our F09 estimate increased from $1.04 to $1.16 vs. current Consensus of $1.07...We are increasing our F10 EPS estimate from $1.14 to $1.40 on our belief improved sales trends will continue into F10."

To see more analyst ratings on DKS Click Here.

Dick's Sporting Goods, Inc., a sporting goods retailer, together with its subsidiaries, offers sporting goods equipment, apparel, and footwear for men, women, and children.

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