Foot Locker (FL - Free Report) stock moved higher on Tuesday morning after the retailer received a significant analyst upgrade.
Morgan Stanley analyst Jay Sole upgraded Foot Locker stock from “Equal-Weight” to “Overweight.” On top of that, Sole assigned the struggling footwear retailer a $65 price target.
The Morgan Stanley analyst tried to reassure Foot Locker investors who are worried that the retailer is inevitably doomed due to the rise and proliferation of e-commerce—and Amazon (AMZN - Free Report) in particular.
Sole noted that Foot Locker targets a different consumer base than Amazon. The analyst pointed out that less than 5% of the footwear retailer’s top 200 selling shoes are even available on Amazon. He also noted that despite the race for brands to sell directly to consumers online, the appeal of brick-and-mortar is still out there.
The analyst projected that Foot Locker will get back to 3% to 5% same-store growth down the line. Sole noted that the current dip might be a solid place to scoop up Foot Locker stock.
Today’s upgrade came after a Barclays’ analyst noted last week that he thinks Foot Locker stock is under valued. Barclays’ analyst Matthew McClintock stated that an extremely negative, and perhaps unrealistically bleak, Foot Locker future has led to the massive year-to-date decline in the company’s stock price. Barclays maintained its “Overweight” rating on Foot Locker.
Shares of Foot Locker climbed 4.16% in Tuesday morning trading to hover around $51 a share. The company’s stock price has been trending upward over the last two weeks, but Foot Locker is still well below its 52-week high of $79.43 per share.
Foot Locker is currently a Zacks Rank #4 (Sell) but scored an “A” grade for Value and a “B” for Growth in our Style Score system.
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