Mannequins stand next to merchandise displayed for sale at a Dick's Sporting Goods Inc. store in West Nyack, New York.

Dick's Sporting Goods shares sank more than 4.5 percent Thursday after J.P. Morgan said the retailer's future gains may be limited because the company faces tougher comparisons and rising inventories.

Analyst Christopher Horvers downgraded the retailer's stock to neutral from overweight and trimmed his price target to $41 a share from $46. Horvers' new price target on Dick's implies a 10 percent upside from Wednesday's close of $37.26.

"Looking forward, gross margin-driven upside appears less probable given 3Q's performance, changing comparisons, and rising inventory levels," Horvers said in a note Thursday. "The latter appears to be a theme across retail (which can be risky in the seasonal apparel world)."

Horvers' note comes after the company reported earlier this week better-than-expected earnings for the third quarter and revenue in line with estimates.

The analyst pointed out that Dick's same-store sales growth for 2019 is expected to be less than 1 percent after averaging 2.1 percent between 2011 and 2015. He also noted that while the company's 25 percent Black Friday store discount will help boost sales, it will not boost margins. Inventory levels, meanwhile, rose 1 percent in the third quarter after falling 5 percent in the first half of 2018 "with inventory days estimated to return back to 2015-2H17 levels."

"Said succinctly, while we see the topline story improving from here, and DKS will clearly benefit from its 'last man standing' status with vendors now supporting channel management, we find the risk-reward less appealing," Horvers said.

Shares of Dick's Sporting Goods are up nearly 30 percent this year, outperforming the SPDR S&P Retail ETF (XRT) in that time period. The XRT is up 3.2 percent this year.