Fitness financials: Dick’s receives analyst downgrade, plus GSI Commerce

A Raymond James analyst lowered his rating on Dick's Sporting Goods to "underperform" from "market perform," and Citigroup initiated coverage on GSI Commerce with a “buy” rating.
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Dick’s receives analyst downgrade

A Raymond James analyst lowered his rating on Dick's Sporting Goods (NYSE: DKS), saying the company's operations and tough macro-economic pressures pose significant challenges.

The company has made poor capital spending decisions and has delivered operating earnings performance that is less than stellar, analyst Dan Wewer wrote in a client note.

While the company plans to increase its selling space in the coming fiscal year, but the decision to expand during the grip of a long recession increases its business risk, Wewer wrote. He also noted that Dick's is trading at a premium to its peers who are delivering superior sales and margin improvement.

Raymond James lowered the rating on Dick's to "underperform" from "market perform."



GSI Commerce coverage initiated by Citigroup


Citigroup initiated coverage on GSI Commerce (Nasdaq: GSIC) with a “buy” rating.

“With a rising penetration of the top 500 online retailers – 10 percent today vs. 5 percent in 2006 -- very high contract renewal rates of average six to seven years duration and performance that has consistently generated greater than average (same-store sales) growth for its clients, we view GSI as one of the best small-mid cap plays in e-commerce,” analyst Mark Mahaney wrote in a research note.

Mahaney also noted that the stock is down 13 percent year to date and 18 percent over the past month, weighed down by investor concern about the retail outlook and the company’s stepped-up acquisition activity. He contends the stock looks cheap, trading at 8x 2011 EV/EBITDA, with better than 30-percent EBITDA growth.

Mahaney set a $29 price target.



--Compiled by Wendy Geister

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