Foot Locker (FL): Buy The Pullback - Citi

Citi analyst, Kate McShane, reiterated her Buy rating on shares of Foot Locker (NYSE: FL) but cut the price target to $81 after management indicated that softer US retail trends could continue into Q2 and the rest of the year.

However, the analyst views the pullback as significantly overdone and would be buyers for 4 reasons:
1) shares declined significantly more than the EPS adjustments and are now at 10.4x fwd P/E (vs. 13.4x pre-earnings)
2) the company continues to outperform the majority of mall retailers w/positive comp trends and accelerating traffic through Q1
3) Investors remain concerned about a downturn in the athletic ‘cycle’ though he sees better trends vs. traditional brown shoe – note that ASPs were up +MSD
4) FL’s dividend pays investors to wait for the next catalyst

The new PT of $81 is down from $92.

For an analyst ratings summary and ratings history on Foot Locker click here. For more ratings news on Foot Locker click here.

Shares of Foot Locker closed at $58.72 yesterday.

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