Dick's Sporting Goods Inc.'s (DKS) - Get Report post-earnings honeymoon was over less than 24 hours after it started after analysts at JPMorgan slashed the company's rating to "neutral" from "overweight", sending the stock falling more than 4.67% on Thursday, Nov. 29.
JPMorgan also lowered the sports retailer's price target to $41 from $46, citing concerns about the company's margins.
"Looking forward, gross margin-driven upside appears less probable given 3Q's performance, changing comparisons and rising inventory levels. The latter appears to be a theme across retail (which can be risky in the seasonal apparel world)," analyst Christopher Horvers wrote.
Dick's had a strong showing on Wednesday following the release of its third-quarter earnings. The retailer reported earnings of 39 cents a share on revenue of $1.94 billion. Analysts were expecting the company to report earnings of 26 cents on revenue of $1.88 billion.
The company also raised its full year EPS guidance to between $3.15 and $3.25 a share, up from its previous view between $3.02 and $3.20.
"Said succinctly, while we see the top-line story improving from here, and DKS will clearly benefit from its 'last man standing' status with vendors now supporting channel management, we find the risk-reward less appealing," Horvers said.
The stock peaked at $37.37 in trading Wednesday. It was down to $35.52 on Thursday.