Wells Fargo upgraded Dick’s Sporting Goods to “Overweight” from “Equal Weight,” citing a multi-year recovery story driven by the Foot Locker acquisition and strengthening core operations.
Analyst Ike Boruchow also raised his price target on Dick’s to $240 from $220. On Monday, Dick’s closed at $214.10, up $5.26, on the day. Its 52-week range is from $186.6 to $244.38.
Boruchow said a primary reason he feels positive on Dick’s is his belief that the Foot Locker business, acquired in October 2025, will be able to deliver multi-year margin upside, increasing from 1 percent to 2 percent to return to levels reaching 7-to-8 percent, with the aid of better allocation and merchandising.
He wrote in a note, “FL can drive meaningful upside to estimates as DKS is bringing highly complementary operational and merchandising capabilities that directly address the historic weaknesses at the FL business, re-establishing healthier brand relationships and allocations that have driven at least half of the earnings deterioration over the last 4 years, which we think should clear relatively low expectations for margin recovery and drive meaningful EPS upside.”
Boruchow also pointed to continued strong execution at the legacy Dick’s business DSG, which has advanced to a “stronger position today and in the early-innings of building a compelling fly-wheel (high ROI investment cycle).
Boruchow added, “The core DICK’s Sporting Goods business remains attractive as the category leader, delivering +LSD/+MSD growth with a highly defensible moat in omni-channel capabilities, merchandising and partnerships with brands that have driven sustainable improvements in store productivity, margins, and returns.”
The analyst further sees Dick’s newer initiatives, including the rollout of House of Sport and Field House concepts, GameChanger and its retail media push, as further differentiators for the retailer. Boruchow stated, “The more work we have done on the multiple initiatives at DKS (expanding the fleet of stores with unique concepts, the expansion into paid loyalty, the GameChanger app, and DICK’s Media Network), the more compelled we are that these are working together in driving value and engagement with the highest-value customers, breaking apart from competition, and further cementing its position as the partner of choice in the US for sporting goods and athletic brands.”
Finally, Boruchow sees Dick’s as the optimal vehicle for investors to capitalize on the potential product turnaround at Nike, noting encouraging channel checks for Spring 2027 product lines. He wrote, “For investors that believe in an eventual Nike recovery (but can’t find comfort with the ongoing resets in their international operations), we view DKS as the cleanest way to invest in a healthier NA market. While it remains a topic of debate, our industry checks indicate that NA demand from retailers is incrementally more positive on innovation and product hitting for Spring 2027, and we see DKS as having the most concentrated benefit (and at just ~12x P/E).”
Boruchow cautioned that the stock might be pressured by second-quarter results, with Wells Fargo expecting Dick’s to deliver EPS of $3.72, below Wall Street’s consensus target of $3.77. Wells Fargo believes the shortfall will be due to softness at the Foot Locker segment.
However, he believes investors will be more focused on back-to-school trends at Foot Locker, how the core Dick’s SG business is faring after the World-Cup boost, and potential “profit levels” to make up for any sales shortfalls “than the actual 2Q results.”
Boruchow continues to expect Dick’s to post earnings of $14.20 for the current year and $16.50 in fiscal 2027 against $13.20 last year.
Image courtesy Dick’s Sporting Goods
