UBS Cuts Price Target on Foot Locker (FL) to $69 Following 1Q; Reiterates Buy
UBS maintained a Buy rating on Foot Locker (NYSE: FL), and cut the price target to $69.00 (from $74.00), following the company's 1Q earnings report.
Analyst Michael Binetti commented, "Unfavorable optics around FL's 1Q print were fairly in line with our expectation: 1) softlines industry deceleration that could leave FL's SSS below Street expectations (FL reported +3% vs our +3%, but buyside ~+4-5%); 2) lack of EPS upside due to 1x costs ($4m for HQ relo); and 3) May-to-date SSS below +MSD 2Q guidance given impactful b'ball launches at end of May. That said, details on 2Q guidance leave less visibility than we expected. FL noted that 2 NYC flagship stores will be closed for renovation (one reopening by BTS, one by holiday)—potentially weighing on 2Q SSS and margins (dead rent). We're maintaining our FY16E EPS of $4.77 but trimming our 2QE EPS to $0.91 (from $0.93) based on B&O and SG&A deleverage amid store investments."
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Shares of Foot Locker closed at $54.77 yesterday.