Over the first half the of 2021 and especially in Q2, economies reopened and consumers opted to spend more time in physical retail spaces. Foot Locker, Inc. (FL) experienced the trends first hand, printing impressive Q2 earnings results last Friday. The athletic retailer has made meaningful progress, as acquisitions, share repurchases, and keeping stores open helped drive it toward consensus-beating revenues. (See Foot Locker stock charts on TipRanks)
Reporting on this bullish direction is Robert Drbul of Guggenheim Capital, who expects Foot Locker to “emerge from the COVID-19 disruption as a continued strong partner for top brands in a strong athletic category.”
Drbul reiterated a Buy rating on the stock, and maintained his price target of $70. This target suggests a potential 12-month upside of 19.99%.
Foot Locker beat Wall Street consensus estimates on adjusted earnings per share, as well as gross margin. Drbul mentioned that its stores were open for 94% of the quarter, aiding the retailer in achieving its high results.
The five-star analyst noted that Foot Locker has completed repurchasing 125,000 shares worth $8 million, and currently exists in a state of healthy financial standing. Moving forward, the company is poised to capture retail revenues from the back-to-school shopping season.
Accelerating its inorganic growth and international reach, FL is nearing completion on two acquisitions, one for Japanese retailer Atmos, and one for Eurostar. Calling Atmos a “compelling asset,” Drbul asserts that the retailer expands Foot Locker’s global brand, driven by its “robust omni channel retail platform and online presence.” Moreover, the analyst was encouraged to add that “built on a community engagement and a full family offering,” Eurostar has a loyal customer base.
Regarding downside, if the Delta variant causes events to play out at all similarly to the way they did at beginning of the pandemic, retail closures could loom as a risk. The pandemic accelerated the existing decline of large shopping malls, in which Foot Locker has many store locations.
On TipRanks, FL has an analyst rating consensus of Moderate Buy, based on 9 Buy and 5 Hold ratings. The average Foot Locker price target is $73.50, representing a possible 12-month upside of 25.99%. FL closed trading Friday at a price of $58.34.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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