Credit Suisse Turns Bearish On Foot Locker, Downgrades To Neutral

Seth Sigman of Credit Suisse on Friday downgraded shares of Foot Locker, Inc. (NYSE: FL) to Neutral from Outperform with no change to a previous $57 price target.

“Foot Locker stock has recovered after the recent pullback on Finish Line's comments, and in general has been a strong outperform over the past year owing to a multiple re-rating and upside to earnings per share as it has delivered some of the best results in retail,” Sigman wrote. The analyst does add that the fundamentals do “remain health” but investors should look for a better entry point when buying shares.

According to Sigman, Foot Locker is technically in a position to generate an earnings per share of $4 in 2015, ahead of the $3.87 consensus estimate with a 6 percent comp gain. However, this scenario includes double-digit growth in basketball, an acceleration in international and SIX:02 growth and a more aggressive buyback program initiated by management.

Sigman is nevertheless projecting the company will earn $3.85 per share in the full year 2015, implying 11 percent earnings per share growth following 2014's more than 20 percent growth. The analyst assumes some multiple compression as the implied relative strength versus results may be less with easier comparisons elsewhere.

The analyst concludes by stating that the company plans to unveil an updated strategic outlook in the spring which may detail how it will accelerate a number of growth initiatives.