12:24 PM EDT, 03/11/2024 (MT Newswires) -- Dick's Sporting Goods (DKS) could see upside to comparable sales forecasts in its fiscal fourth quarter, with the athletic goods retailer potentially benefiting from easier annual comparisons and relatively consistent industry growth trends, Wedbush Securities said in a Monday client note.

The brokerage estimates the company's same-store sales metric to be flat for its most recent completed three-month period, while the consensus on Capital IQ is for a gain of 0.6%. However, Wedbush sees upside to a 2% to 3% growth range as the retailer is lapping a sequentially easier comparison in the prior-year quarter. It also expects that Dick's took advantage of a favorable demand environment through the holiday season with a full inventory assortment.

"We believe that Dick's Sporting Goods was able to capitalize during the holiday shopping period and from cold, snowy weather in January," analysts led by Seth Basham wrote. A comparable sales increase of more than 2.5% would still represent a sequential deceleration of 40 basis points on a two-year basis and a decline of 660 basis points on a three-year stacked basis, according to the analysts.

Wedbush expects the company to record earnings of $3.30 a share for the quarter with potential upside to a range of $3.50 to $3.60, reflecting robust sales and cost reduction. The Street is looking for normalized and GAAP EPS of $3.36 and $3.33, respectively.

The investment company believes the retailer is set for incremental market share gains in its ongoing fiscal year, led by store growth and service- and technology-based investments. It should also continue to see momentum from sporting categories such as team sports, golf and pickleball, according to the report.

Per-share earnings are estimated at $12.85 for fiscal 2024, Wedbush said. The company is managing inventories and promotions well to support gross margins, while its business optimization plan should subdue selling, general, and administrative growth to the low-single-digit range this year versus a double-digit increase in 2023.

The brokerage has a neutral rating on Dick's Sporting Goods' stock with a 12-month price target of $160. The company is scheduled to release its latest financial results on Thursday.

"While fundamentals are improving, and concerns of an industry sales and (Dick's Sporting Goods) gross margin unwind toward pre-pandemic levels are fading, we stay sidelined on (Dick's Sporting Goods) based on rising expectations and elevated valuation," Basham said.

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