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1Q17 Earnings Overview: Why Foot Locker Stock Plunged 17%

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1Q17 Earnings Overview: Why Foot Locker Stock Plunged 17% PART 5 OF 5

Wall Street Cuts Target Price after Foot Locker’s 1Q17 Results

Recent analyst actions on FL

After Foot Locker (FL) posted weak 1Q17 results, Wall Street reacted with a series of price target cuts. Barclays maintained its “overweight” rating on FL while lowering the target price to $80 from $85. Canaccord Genuity also maintained its “buy” rating and reduced the price target to $75 from $87. J.P. Morgan also cut the target price to $69 from $82 while maintaining its “overweight” rating.

Cowen and Company maintained its “market perform” rating. Like other brokers, it also lowered the target price to $64 from $77. Analyst John Kernan from Cowen commented, “As we look into future years and long-term earnings potential, we see challenges to move FL’s operating margin higher, which on low-single-digit SSS would likely produce only mid-single digit EPS growth with share repurchase being the primary drive.”

Wall Street Cuts Target Price after Foot Locker’s 1Q17 Results

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Wall Street recommendations

While there were target price revisions after FL’s 1Q17 results, its ratings remained untouched. Of the 23 Wall Street analysts that cover Foot Locker, 70% of them recommend a “buy,” and the remaining recommend a “hold.”

Competitor Dick’s Sporting Goods (DKS) also doesn’t have any “sell” recommendations. The company received a “buy” rating by 59% of analysts and a “hold” rating by 41%.

Nike (NKE), Under Armour (UAA), and Lululemon Athletica (LULU), in comparison, have received “sell” recommendations from 3%, 17%, and 9% of analysts, respectively.

Ratings

Foot Locker’s stock has received an average rating of 1.9 on a scale where one is a “strong buy” and five is a “strong sell.” Foot Locker has one of the best analyst ratings among peers. DKS and DSW (DSW) have received ratings of 2.1 and 3.1, respectively. Under Armour, Nike, and Lululemon are rated 2.8, 2.2, and 2.5, respectively.

Investors who want exposure to FL could consider the iShares Edge MSCI Multifactor Consumer Discretionary ETF (CNDF), which invests 1.8% of its portfolio in the company.

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