Valuation and risks
We value the sporting goods sector using DCF, as we expect investors tofocus on the sector’s long-term value creation. For WACC, we follow DB’sview on RFR and ERP while assigning a beta between 0.9to 1.3and terminalgrowth of 1-2%. Downside risks: weaker cyclical recovery, weaker innovationthat fails to drive new demand, sports segmentation and e-commerce’sinability to drive sector growth.
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