Guggenheim Thinks Foot Locker Inc’s Stock is Going to Recover

By Jason Carr

In a report released today, Robert Drbul from Guggenheim maintained a Buy rating on Foot Locker Inc (FLResearch Report), with a price target of $60. The company’s shares opened today at $44.89, close to its 52-week low of $43.04.

Drbul wrote:

“We were disappointed with today’s result and are refining our estimates/ lowering our price target to reflect a more muted outlook. However, we would use today’s share price weakness (-16% vs. S&P 500 up slightly) as an incremental opportunity to accumulate shares as we continue to believe valuation remains attractive (shares trade at ~9x our FY19E EPS) given our expectations for ~MSD% comp and EPS growth in FY19E. We are maintaining our BUY rating, but lower our PT to $60 from $75. After finishing FY18 with an impressive +9.7% in 4Q, FL drove +4.6% comp growth in 1Q19. While FL’s comp was one of the strongest in our group so far, it was below our expectations. Additionally, gross margin expansion was softer than expected, while the SG&A rate deleveraged at a more pronounced rate.”

According to TipRanks.com, Drbul is a 5-star analyst with an average return of 9.4% and a 64.2% success rate. Drbul covers the Services sector, focusing on stocks such as National Vision Holdings Inc, Ascena Retail Group, and Ralph Lauren Corp.

Foot Locker Inc has an analyst consensus of Moderate Buy, with a price target consensus of $70.07, implying a 56.1% upside from current levels. In a report issued on May 17, B.Riley FBR also initiated coverage with a Buy rating on the stock with a $73 price target.

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Foot Locker Inc’s market cap is currently $5.93B and has a P/E ratio of 11.34. The company has a Price to Book ratio of 2.37.

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Foot Locker, Inc. engages in the retail of athletic shoes and apparel. It operates through the Athletic Stores and Direct-to-Customers segments. The Athletic Stores segment sells athletic footwear and apparel under the Foot Locker, Lady Foot Locker, SIX:02, Kids Foot Locker, Champs Sports, Footaction, Runners Point, and Sidestep brands.