Wells Fargo analysts issued a price target that implies 15% upside for Dick's Sporting Goods. This required advanced mathematics. They looked at Friday's closing price. They multiplied it by 1.15. They wrote a note about it.
The turnaround is just getting started. Not finishing. Not halfway done. Just getting started. Wells Fargo has seen the future and the future is sporting goods purchased at slightly higher valuations than today.
Retail traders will read "turnaround just getting started" and assume they're early. They are not early. Wells Fargo published this analysis after the stock already moved. After earnings already printed. After everyone with a Bloomberg terminal already traded it. But sure, you with your Robinhood account and your Reddit due diligence are getting in on the ground floor.
The analyst note shows 15% upside. Shows it to whom? To people who pay for Wells Fargo research. Not you. You get the headline three days later through a financial news aggregator while you're sitting on the toilet. By then the institutions have already decided whether they agree. They have disagreed. You will learn this when you buy.
Dick's Sporting Goods sells sporting equipment to people who will use it twice. The business model is bulletproof. Americans buy exercise bikes in January and use them as coat racks by March. This is called recurring revenue in the analyst community.
The turnaround involves doing the same thing they were doing before but calling it a turnaround. Wells Fargo charged someone money to learn this.
Fifteen percent upside assumes nothing changes and everything goes exactly as planned and the market agrees with Wells Fargo's assumptions and their discount rate and their terminal value calculation. What could go wrong except literally anything.
Photo by Jack Cohen on Unsplash
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