Dick's Sporting Goods' (DKS) longer-term earnings growth profile has increased despite near-term pressures to fiscal 2026 earnings, with the company's risk-reward profile being favorable, UBS said in a note Friday.
According to the note, the company has a "promising" catalyst's path this year with the World Cup and tax refunds approaching. The company also sees potential for ahead-of-schedule upside at Foot Locker as Dick's Sporting Goods executes on its playbook.
The company's initial 21-store pilot for Foot Locker also exceeded expectation in just a few months. However, the company's decision to retain a higher number of unprofitable stores this year is expected to pressure earnings in 2026 and delay EPS accretion until fiscal 2027, UBS said.
The company's Q4 performance showcased comparable sales for the core brand at 3.1% meeting the market's bar for 3%, with Foot Locker making "significant progress in cleaning out the garage," UBS said.
UBS maintained its buy rating on the company's stock, with a $275 price target.
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