Baird has maintained a Neutral rating on Foot Locker (NYSE: FL) while issuing a Bearish Fresh Pick trading call through November 2023, indicating potential downside risks for the stock. The firm lowered its price target from $35 to $27, citing concerns over softer U.S. consumer spending and reduced sales visibility.
Key highlights:
- Sales Outlook: Baird reduced its fiscal 2024 comparable sales growth estimate to 1%, down from the 3% consensus. Concerns include volatile sales performance and challenging year-over-year comparisons for the holiday season.
- Nike Uncertainty: An upcoming leadership change at Nike, a major supplier, adds to the uncertainties for Foot Locker.
- Earnings Estimates: Baird lowered its fiscal 2024 earnings per share (EPS) forecast to $1.40, below both Foot Locker’s guidance and market consensus. The fiscal 2025 EPS estimate was also reduced to $2.00 from $2.75.
Despite Foot Locker’s potential to achieve its 2028 margin targets, Baird expects progress to be gradual due to economic headwinds and near-term investments.