BofA downgraded Dick’s Sporting Goods to Neutral from Buy. After" normalization of spending on categories that outperformed during COVID-19 ," the re-opening of alternative discretionary spending opportunities pulling spending away from COVID winners,
" the potential need for further inventory actions in seasonal and other product that could pressure gross margin in F2H, and " magnified expense deleverage given investments in wages, advertising, technology and store growth ."While I have a preference for 12x when scanning for firms, BofA’s 10x multiple is reasonable, as they note it’s the lower bound of 10x-15x historically.
Neutral at BofA means the following: “Neutral stocks are expected to remain flat or increase in value and are less attractive than Buy rated stocks.”Shares thought they had found shelter after the clubbing they took Tuesday, dropping 25% to close $111.53. Just after 6AM in New York, the note hit desks and DKS promptly slid another half-percent. Shares closed Wednesday at $111.53, down some 24%.
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