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Fly News Breaks for May 19, 2017
FL
May 19, 2017 | 09:11 EDT
Citi analyst Kate McShane views today's post-earnings selloff in shares of Foot Locker as a buying opportunity. The quarter, as previously indicated, was negatively impacted by a slow start to the year and delayed tax refund checks in February, McShane tells investors in a research note. She continues to see market share gains for Foot Locker and keeps a Buy rating on the shares with a $92 price target.
News For FL From the Last 2 Days
FL
Jun 22, 2017 | 07:38 EDT
Canaccord analyst Camilo Lyon said Nike (NKE) remains a key partner of Foot Locker (FL) and gave five reasons why the former's partnership with Amazon (AMZN) would not hurt them. He said Foot Locker helps commercialize Nike's innovations; more than 60% of its customers pay in cash and are less likely to use Amazon; the company has created a thriving environment for sneaker culture that intersects with local communities; the assortment on Amazon would be more mainstream, posing a bigger threat to department stores; and Foot Locker could reduce orders and shift purchases to other brands. Lyon reiterated his Buy rating and $75 price target on Foot Locker shares.
FL
Jun 21, 2017 | 16:23 EDT
Stocks began the session little changed but the Nasdaq soon asserted its position as the best performing index of the day. The tech heavy index moved higher and gained ground throughout most of the day while the Dow and S&P struggled. There was little from a macro standpoint to be pointed to as a catalyst as the market is in somewhat of a news vacuum with few earnings reports and little from the economic calendar. The price of oil remains under pressure, falling another 2% today. ECONOMIC EVENTS: In the U.S., existing home sales bounced 1.1% to a 5.62M rate in May, which was a little better than projected. NYMEX crude initially jumped above $44 per barrel after the EIA update, which showed a 2.45M barrel crude drawdown versus the forecast for a 1.2M barrel decline. However, the strength was short lived and WTI crude closed with a drop of over 2% to trade near $42 per barrel. COMPANY NEWS: Shares of Nike (NKE) advanced 2% after Goldman Sachs analyst Lindsay Drucker Mann and NPD Group's Sports Industry Analyst Matt Powell pointed to signs this morning that the sportswear giant and Amazon (AMZN) could be nearing a direct-sales deal... Intel (INTC) shares dipped about 1%, and AMD (AMD) shares rose by over 10%, after the latter announced the launch of its EPYC series data center processors. Analysts were upbeat on the processors and several mentioned the increased competitive threat they represent to Intel's data center business... Following recent acquisitions by Amazon and Wal-Mart (WMT), Target (TGT) will face increased pressure from the competition, Citi analyst Kate McShane acknowledged, leading her to downgrade the stock to Neutral to Buy. Target fell about 0.75% for the session, bringing its slide since the Whole Foods (WFM) deal announcement to about 9%... Meanwhile, Reuters reported that Anthem (ANTM) plans to reduce its individual plan offerings for Obamacare in Wisconsin and Indiana in 2018. MAJOR MOVERS: Among the noteworthy gainers was La-Z-Boy (LZB), which advanced 22% after reporting better than expected quarterly results and increasing its share purchase authorization. Also higher was Red Hat (RHT), which gained nearly 10% after reporting earnings and raising its fiscal 2018 guidance. Additionally, CBS (CBS) rose 3% following media reports that the company will approach upfront ad sales meetings with high single-digit per-viewer pricing gains. Among the notable losers were Foot Locker (FL) and Dick's Sporting Goods (DKS), which fell about 5% and 4%, respectively, after the reports on Nike's plans to sell directly on Amazon.com. Also lower was Cobalt (CIE), which dropped by more than 12% amid the oil decline after the stock was downgraded to Underweight from Equalweight at Capital One. INDEXES: The Dow fell 57.11, or 0.27%, to 21,410.03, the Nasdaq gained 45.92, or 0.74%, to 6,233.95, and the S&P 500 declined 1.42, or 0.06%, to 2,435.61.
FL
Jun 21, 2017 | 14:44 EDT
Barclays recommends buying Foot Locker "aggressively" on weakness today following reports of Nike (NKE) potentially partnering directly with Amazon (AMZN). Analyst Matthew McClintock believes the market is overreacting and discounting Foot Locker's premium product positioning. The analyst notes most of Under Armour's (UA) marquee products are not being sold directly by Amazon, but through third party vendors, and expects Nike to pursue a similar strategy and also not introduce new innovative products through Amazon.
FL
Jun 21, 2017 | 14:04 EDT
Nike (NKE) gained Wednesday following reports indicating a potential direct-sale deal with Amazon (AMZN), sending shares of Foot Locker (FL) sharply lower and leading Wall Street to call the event a possible negative for sporting goods retailers and department stores. WHAT'S NEW: NPD Group's Matt Powell tweeted early Wednesday: "Hear Nike will sell directly on Amazon." Following that statement, Bloomberg quoted a source as saying Amazon will start selling Nike shoes directly via a "brand-registry" program that curates selection to fight counterfeiters. The Wall Street Journal added its sources to the pile of confirmatory reports later in the afternoon, saying Nike has agreed to sell "some" products directly on Amazon in exchange for the company policing counterfeit and third-party sales. GOLDMAN SACHS CHECKS: Goldman Sachs analyst Lindsay Mann says channel checks "indicate NKE could be close to commencing a direct relationship selling product on Amazon." She notes that Nike products are already "abundantly available" on Amazon through third-party sellers, but argues that this new step would give the company direct economic exposure to a significant distribution channel while improving brand presentation on the platform and expanding its access to millennial consumers. Based on her benchmarking of other wholesale brands on Amazon.com, Mann doesn't expect the move to be immediately needle-moving for Nike, and estimates the company building an incremental 100 basis points of global sales as the partnership ramps. More generally, the analyst says Nike's potential move could "inspire" other holdout wholesale brands to pursue their own direct relationships with Amazon. Turning to Dicks Sporting (DKS) and Hibbett Sports (HIBB), Mann says Nike's move would amount to incremental competition for sporting goods retailers that could offset the market share gains accruing to Dicks in the wake of bankruptcies in the space. NEGATIVE FOR DEPARTMENT STORES: Gordon Haskett analyst Charles Grom says Nike's potential move would "clearly have a negative impact" on department stores, with particular implications for J.C. Penney (JCP) and Kohl's (KSS) as one of their "big national brand traffic drivers" would be impaired. PRICE ACTION: Shares of Nike are up 1.8% in afternoon trading while shoe-centric retailers Foot Locker and Finish Line (FINL) are down 6% and 4.3%, respectively. Nike's smaller rival Under Armour (UAA), meanwhile, is lower by about 2%.
FL
Jun 21, 2017 | 12:53 EDT
The major averages remain mixed at midday, as they were for most of the morning. The Nasdaq has been strong since the open and is higher by roughly 0.5%, but the Dow and S&P are struggling to stay close to the flatline. Oil prices remain under pressure despite a larger than expected drawdown of supply. The knee jerk reaction following the data was for WTI prices to move higher, but the selling renewed and pushed the commodity back below $43 a barrel. ECONOMIC EVENTS: In the U.S., existing home sales bounced 1.1% to a 5.62M rate in May, which was a little better than projected. NYMEX crude initially jumped above $44 per barrel after the EIA update, which showed a 2.45M barrel crude drawdown versus the forecast for a 1.2M barrel decline. However, the strength was short lived and WTI crude has dipped about 2% to trade below $43 at midday. COMPANY NEWS: Shares of Nike (NKE) have advanced over 1.5% after Goldman Sachs analyst Lindsay Drucker Mann and NPD Group's Sports Industry Analyst Matt Powell pointed to signs this morning that the sportswear giant and Amazon (AMZN) could be nearing a direct-sales deal... Intel (INTC) shares have dipped 1.5%, and AMD (AMD) shares are climbing, after the latter announced the launch of its EPYC series data center processors. Analysts were upbeat on the processors and several mentioned the increased competitive threat they represent to Intel's data center business... Following recent acquisitions by Amazon (AMZN) and Wal-Mart (WMT), Target (TGT) will face increased pressure from the competition, Citi analyst Kate McShane acknowledged, leading her to downgrade the stock to Neutral to Buy. MAJOR MOVERS: Among the noteworthy gainers was La-Z-Boy (LZB), which advanced 18% after reporting better than expected quarterly results and increasing its share purchase authorization. Also higher was Red Hat (RHT), which gained 10% after reporting earnings and raising its fiscal 2018 guidance. Among the notable losers were Foot Locker (FL) and Dick's Sporting Goods (DKS), down 7% and 6%, respectively, after the reports on Nike's plans to sell directly on Amazon.com. Also lower was Cobalt (CIE), which slipped 11.5% amid the oil decline after the stock was downgraded to Underweight from Equalweight at Capital One. INDEXES: Near midday, the Dow was down 40.70, or 0.19%, to 21,426.44, the Nasdaq was up 34.50, or 0.56%, to 6,222.53, and the S&P 500 was down 1.53, or 0.06%, to 2,435.50.
FL
Jun 21, 2017 | 10:03 EDT
Shares of several sneaker and apparel retailers - including Foot Locker (FL), Dick's Sporting Goods (DKS), Finish Line (FINL) and Hibbett Sports (HIBB) - are sliding after at least two sources said that Nike (NKE) could be close to starting direct sales on Amazon.com (AMZN). Both Goldman Sachs analyst Lindsay Drucker Mann and NPD Group's Sports Industry Analyst Matt Powell pointed to signs this morning that Nike and Amazon could be nearing a direct-sales deal.
FL
Jun 21, 2017 | 09:20 EDT
UP AFTER EARNINGS: La-Z-Boy (LZB), up 14.1%... Red Hat (RHT), up 9.8%... Winnebago (WGO), up 2.9%... CarMax (KMX), up 7.2%... Adobe (ADBE), up 4.2%. ALSO HIGHER: CA (CA), up 13.1% after Evercore ISI said reasonable fair value in a go-private transaction could be $34.00-$42.00 per share... Pluristem (PSTI), up 3% after being upgraded to Buy from Hold at Maxim. LOWER: Foot Locker (FL), down 4.1% following a tweet by NPD Group's Sports Industry Analyst Matt Powell that reports Nike (NKE) may be close to a direct-sales agreement with Amazon (AMZN)... Sangamo (SGMO), down 9.2% after its 10M share Spot Secondary priced at $7.25... Cara (CARA), down 3.1% after announcing the continuation of Phase 3 trial of I.V.
FL
Jun 20, 2017 | 13:25 EDT
Bullish option flow detected in Foot Locker with 7,238 calls trading, 3x expected, and implied vol increasing almost 2 points to 28.11%. Aug-17 52.5 calls and Jul-17 52.5 calls are the most active options, with total volume in those strikes near 5,100 contracts. The Put/Call Ratio is 0.06. Earnings are expected on August 18th.
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