Barclays Keeps Dick's Sporting Goods at Overweight with Raised PT to $246

Barclays Keeps Dick's Sporting Goods at Overweight with Raised PT to $246

Barclays has maintained its "Overweight" rating for Dick's Sporting Goods (DKS), raising its price target to $246. This decision comes amidst the company's strong second-quarter results and the impending acquisition of Foot Locker, scheduled to close on September 8, 2025. The investment bank believes that the merger will bolster Dick's position in the footwear and apparel market, driving growth and profitability.

In Q2 2025, Dick's reported record sales and a 5% comparable sales growth, driven by the strength of its core business and momentum in its golf and outdoor categories. The company's net sales increased to $3,647 million, up from $3,474 million in the same period last year. Additionally, the earnings per diluted share (EPS) increased to $4.71, compared to $4.37 in the prior year quarter. The company also reported a 5% increase in comparable sales, driven by growth in average ticket and transactions [2].

The acquisition of Foot Locker is expected to strengthen Dick's Sporting Goods' position in the footwear and apparel market. The merger aims to create a $21 billion global leader with 3,250 stores across 20 countries. By leveraging synergies in supply chains, digital platforms, and international markets, the combined entity targets $100–$125 million in annual cost savings [1]. However, the transaction raises critical questions about the integration risks and debt burden. Dick's strong financials contrast with Foot Locker’s 2025 revenue declines and $38 million net loss, raising concerns about the merger's success.

Barclays' bullish outlook is based on the assumption that Dick's can successfully integrate Foot Locker's operations, realizing the projected synergies without sacrificing customer experience. The investment bank believes that the combined entity's expanded scale justifies the $2.4 billion price tag. However, the success of the merger will depend on factors such as execution of cost synergies, successful digital integration, and regulatory and debt management.

References:
[1] https://www.ainvest.com/news/merger-mirage-dick-sporting-goods-turn-foot-locker-decline-long-term-2508/
[2] https://www.ainvest.com/news/dick-sporting-goods-boosts-2025-comp-sales-outlook-foot-locker-acquisition-2508/