Morgan Stanley cut Foot Locker’s target price to $ 47 on more cautious outlook

mOrgan Stanley has lowered its base stock price forecast Foot locker from $ 66 to $ 47 on a more cautious outlook, reaffirming the footwear and apparel retailer’s rating of “equilibrium”.

In November, Foot locker reported quarterly earnings of $ 1.93 per share for the third quarter, beating market expectations of $ 1.36 per share. The New York-based retailer had sales of $ 2.19 billion for the quarter ended October 2021. That also exceeded the analysts’ expectations.

“We’re lowering ours Foot Locker (FL) Price target of USD 47 with a more cautious ST outlook and subsequently revised MT forecast and LT-DCF assumptions. Recent checks in stores suggest that the number of FL is low Nike (NKE) Inventory that we expect to last through at least 1Q22 NKE expects that we won’t be fully in stock again until May or June 2022. In light of this momentum, we are revising our sales and GM projections for Q4 21 and 2022 from constant SG&A spending, lowering our respective EPS estimates by 23% and 28%, respectively. “Noted Kimberly Greenberger, Morgan Stanley equity analyst.

“We will then refine our MT forecast for the revised base years 2021e and 2022e and reduce earnings per share by an average of 35% in the years 2023-2026e. This is responsible for most of our price target change, although we are also 1) lowering our assumption of the EBIT margin for terminals across all cases (to 5.0%, 10.0% and 3.0% from 6.0%, 10 , 5% and 5.0% previously) in line with the lower MT projections and 2) update our WACC inputs for current market conditions. All in all, our price target, bull and bear falls, go from $ 66, $ 135, and $ 44 to $ 47, $ 115, and $ 33, respectively. Our revised price target corresponds to 4x 2022e EV / EBITDA, slightly below 5 times the average of FL before Covid. “

Morgan Stanley gave the stock price prediction of 115 US dollars in the bull scenario and 31 US dollars in the worst-case scenario. Other equity analysts have also updated their share price outlook. Cowen and Cowen cut their target price from $ 62 to $ 53. Berenberg cut its target price from $ 81 to $ 73. Deutsche Bank has cut its price target from $ 75 to $ 72.

Nine analysts who rate stock for. have offered Foot locker For the past three months, the average 12 month price was forecasting $ 158.57 with a high forecast of $ 170.00 and a low forecast of $ 140.00.

The average target price corresponds to a change of 25.54% compared to the last price of USD 126.31. According to Tipranks, seven of these nine analysts rated seven as “buy”, two as “hold” and none as “sell”.

On Thursday, Foot locker Stocks closed 0.80% lower at $ 43.96. The stock is up over 8% so far this year.

“Four factors cloud our ability to make judgments Foot Locker’s (FL) Earnings growth path making it a ‘show-me’ story: 1) its pre-Covid performance hit and seemingly unattainable LT goals, 2) its large malls presence against declining traffic and limited store growth opportunity (a sales and GM headwind at B&O deleverage), 3) unclear rationalization plans for the cost base compared to probably flat on + LSD after Covid & WSS / Atmos takeover avg. Sales / Comp growth (recall FL requires + MSD compensation for SG&A level) & 4) the impact of GM relocation on eComm, ”added Greenberger of Morgan Stanley.

“We like FLs recent use of cash (dividend increase, stock repo, WSS / Atmos acquisition) and real estate rationalization plans. We expect a decline in performance from 2022 onwards. “

Technical analysis suggests that it is a good time to sell as the 100-day moving average and 100-200-day MACD oscillator signal a strong sell opportunity.

this article was originally published on FX Empire

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