In the fast-paced world of investing, turnaround stories are attracting a lot of attention, and Foot Locker is emerging as one worth considering, according to Piper Sandler.
Abbie Zvejnieks, an analyst at Piper Sandler, recently upgraded the shares of this renowned footwear retailer from Neutral to Overweight. Additionally, she has raised the price target on Foot Locker shares to an impressive $33 from the previous $24.
This positive development is reflected in the stock’s performance, with a 9.4% surge to $31.20 in Thursday’s trading. However, despite this recent boost, the shares are still down by 17% throughout 2023. If this trend continues, it could potentially mark the worst year for the company since its decline of 27% in 2019, as reported by Dow Jones Market Data.
With a noticeable shift in investor focus, attention is turning away from stalwarts like Walmart, TJX, Lululemon, and Deckers Outdoor. Instead, investors are now keenly eyeing consumer stocks that have faced challenges recently. This includes companies like Allbirds, Under Armour, VF Corp, and Wolverine World Wide, as stated by Zvejnieks.
Out of this group struggling to regain their footing, Foot Locker appears to be the one with the most promising prospects in the next 6-12 months. Even if sales growth for Nike products does not show significant improvement, Zvejnieks believes that Foot Locker is best positioned to expand its margins next year.
In conclusion, Foot Locker’s potential as a turnaround story has grabbed the attention of investors. With Piper Sandler’s positive outlook and Zvejnieks’ upgraded rating, Foot Locker’s future looks promising.
Comparing Turnarounds in the Footwear Industry
While turnarounds in the footwear industry may be challenging, there are signs that lower-income consumers are beginning to increase their spending. This could present a positive factor for companies like Foot Locker, which have the potential to offer a wide range of popular products. In comparison, other companies such as Allbirds and Under Armour are facing longer-term issues with their product or brand perception.
Analyzing Turnarounds Metrics
Zvejnieks, an industry expert, has evaluated various metrics to compare turnarounds within the industry. The metrics considered include leverage, consensus expectations, inventory management, valuation, cost savings initiatives, and key management changes. By examining these factors, it becomes clearer how turnarounds differ from one another.
Foot Locker’s Competitive Advantage
As the year draws to a close and inventory levels stabilize across the industry, Foot Locker is well-positioned to provide customers with a diverse selection of trending products. This includes offerings from top brands such as New Balance, Adidas, and Nike. Unlike its competitors, Foot Locker has not faced substantial challenges with product or brand perception. Consequently, it is expected to see quicker recovery and growth.
Top Pick: On Holding
Despite the potential in the footwear industry, Wall Street analysts have identified On Holding as their top pick. This company’s stock has shown promising growth throughout the year. As On Holding continues to establish itself within the performance running community, it has ample opportunity to expand its earnings by offering shoes for various categories such as tennis, trail running, training, and lifestyle.
In conclusion, while some companies in the footwear industry are experiencing difficulties in their turnarounds, Foot Locker and On Holding stand out as promising options for investors. By analyzing various metrics and market trends, it becomes clear that these companies have the potential for continued success and growth.