UBS Reiterates Buy on Foot Locker (FL)
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UBS reiterated a Buy rating and $76.00 price target on Foot Locker (NYSE: FL) as the company shows movement in SSS momentum. For the 3Q, UBS is estimating that FL will report SSS of +5%. This compares to the Street's +4.7% estimate. UBS also sees the company reporting $1.10 in EPS, compared to the Street's $1.11.
Analyst Michael Binetti commented, "FL is setting up as one of the best SSS momentum + '17 EPS upside stories in our retail coverage. In 3Q, we estimate +5% global SSS growth (Street: +4.7%) and $1.10 in EPS (+ 10% YOY, Street: $1.11)—and we see upside to both. Importantly, as we start to look ahead to '17, FL has some of the easiest compares in our coverage (1H17 SSS compares are 4.5pp easier than 2H16). Based on current momentum, we think FL will be able to convincingly guide to mid-single digit SSS growth & double digit EPS growth (in line with its historical guidance pattern) for FY17 with easy compares in 1H and visible margin opportunities (FL described FY16 as peak investment year, including renovating NYC flagships and one-time HQ relocation expenses). Importantly, FL's stock looks inexpensive with low P/E retail names outperforming recently. At 13.6x forward 4-qtr EPS, FL trades just 1-2 P/E pts above KSS & M—which have ongoing negative SSS."
Shares of Foot Locker closed at $69.72 yesterday.
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