NEW YORK (AP) — Shares of Dick's Sporting Goods Inc. rose before Tuesday's opening bell as investors took advantage of a steep drop in the company's stock price the day before and picked up shares at a discount.
On Monday, the Pittsburgh-based sporting goods retailer reported a 17 percent jump in fourth-quarter profit, but it fell short of Wall Street predictions. The company also issued weak outlooks for the current quarter and year. Dick's shares tumbled on the news and ended the day down 11 percent.
Citi analyst Kate McShane on Tuesday backed her "Buy" rating and $58 target price for the company and recommended that investors aggressively buy the stock while it price is still down.
"We think management is taking the right steps to invest in long-term growth while also continuing to provide best-in-class execution to manage near-term retail pressures," McShane wrote in a note to investors.
McShane noted that the 17 percent profit growth came despite a second-consecutive mild winter that reduced demand for cold weather items and the scandal surrounding cyclist Lance Armstrong, which reduced demand for fitness-relate products.
Janney Capital Markets analyst Eric Tracy said that while the company's share price may have been too high before Monday's drop, the steep decline in share price wasn't warranted.
Tracy backed his "Buy" rating for Dick's, but lowered his fair value estimate by $3 to $53. He said that while the company's investments in updating new stores and building new ones may be a drag on its near-term profits, they position it for long-term growth.
In trading an hour before the market opening, shares of Dick's Sporting Goods rose $1.05, or 2.3 percent, to $46.16.