Tuesday, FBR Capital Markets initiated coverage of Foot Locker, Inc. (FL) stock with a Market Perform rating and a price target of $11.
Analyst Eric Tracy noted that rationale for our rating stems primarily from valuation, coupled with a lack of visibility to a turn in comps, and subsequent deleverage of fixed costs, against a consumer macro backdrop that remains tenuous. As the largest mall-based athletic retailer, Foot Locker has the potential to take share from a rationalizing market, but the analyst believes that current headwinds to top-line reacceleration and an intensifying competitive landscape strain visibility to the top line.
The analyst believes management has done a solid job executing on its strategy to improve profitability with tight inventory control, reduce expenses, and capitalize on more favorable real estate renewals/transactions, but these moves may also temper comp growth over the near term.
Currently, FL is up $0.09 or 0.73% and trading at $12.44.
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