Dick's Sporting Goods Likely to Benefit from Sales Momentum, Morgan Stanley Says

MT Newswires Live05-28

Dick's Sporting Goods (DKS) should benefit from stronger sales momentum and better operating leverage in H2 after World Cup marketing spend in H1, Morgan Stanley said in a note Thursday.

"We believe the re-acceleration in topline momentum in the core DICK's Business, and the upcoming positive inflection in Foot Locker margins are underappreciated," the report said.

The note said core sales are improving, with Q1 comparable sales up 6%, and momentum is expected to continue in the mid single-digit range through Q2.

The note said operating leverage is expected to return in H2 as World Cup spending fades and merchandise margins improve.

Foot Locker visibility is improving, buoyed by early merchandise progress, and "Fast Break" conversions, the report said.

Morgan Stanley kept its overweight rating and raised its price target to $270 from $250.

Price: 225.51, Change: +6.30, Percent Change: +2.87

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