Dick's Sporting Goods Earnings Reaction Could Spook Shorts

DKS seems ripe for a short squeeze

Managing Editor
Nov 28, 2018 at 10:18 AM
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The shares of Dick's Sporting Goods, Inc. (NYSE:DKS) are up 3% to trade at $37.48 this morning, after the athletic goods retailer reported stronger-than-expected third-quarter adjusted profit of 30 cents per share, greater than the 26 cents per-share estimate from analysts. While revenue was in-line with expectations, the company also upped its full-year guidance.

On the charts, DKS nabbed an annual high of $39.75 back on Nov. 14. The shares pulled back from there, but quickly found support at their 160-day moving average, a trendline with bullish implications. Overall, the equity now boasts a 30% lead in 2018.

A short squeeze could keep the wind at DKS' back. Short interest fell by 2.4% in the most recent reporting period, yet the 18.01 million shares sold short represents a hefty 24% of the stock's total available float, and nearly seven days of pent-up buying power, at its average pace of trading. 

Analysts have yet to come through with any bull notes, reflective of their overall skepticism. Of the 17 brokerages covering DKS, 11 rate it a "hold" or "strong sell," while its consensus 12-month price target sits at $39.05, just below its annual highs. A fresh round of bullish analyst attention could also vault the retail stock higher. 

 

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