Telsey Advisory Group (TAG) upgraded Foot Locker to “Outperform” as the investment boutique expects the sneaker chain’s comps can turn positive as a strong lineup of product launches arrives.
“Although the athletic industry’s issues will likely linger into 1Q18, we feel like the worst is behind us and believe that Foot Locker acted quickly to adjust expenses, reorganize the business, and prioritize investments,” wrote Kelly Chen in a note to clients.
TAG raised its price target on Foot Locker to $56 from $44.
Overall, TAG listed Deckers, Foot Locker, Nike and Shoe Carnival as its top picks for 2018 in the sporting goods and footwear space.
“We expect the athletic space to pivot back to offense in 2018 as the market gets cleaned up ahead of a strong wave of innovation and events such as the World Cup,” Chen stated.
TAG expects Nike’s North American business to resume growth heading into its fiscal year ended May 31 2019, and believes that will boost Foot Locker’s top-line. TAG’s price target on Nike was raised to $71 from $68.
Deckers is expected to benefit from some of the reorganizational changes and cost-cutting initiatives it’s made as well as the recent cold weather. The recently-announced stock buyback, she believes, also hasn’t been reflected in Deckers’ stock. Deckers’ price target was increased to $96 from $84.
Chen added, “SHOO will be facing tough comparisons, but we think the company remains on trend and believe solid execution and share buybacks will enable the stock to climb higher.” TAG’s price target on Shoe Carnival was increased slightly to $52 from $51.
Photo courtesy Foot Locker
