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Fly News Breaks for May 19, 2017
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
Sep 19, 2017 | 10:45 EDT
Shares of Under Armour (UAA) and Nike (NKE) are slipping after the two athletic gear makers saw their ratings lowered amid concerns about their sector. Wells Fargo analyst Tom Nikic downgraded Under Armour to Underperform as he believes the athletic wear/footwear space "appears poised to take a breather for now," while his peer at Susquehanna cut Nike to Neutral on basketball product oversupply concerns. SELL UNDER ARMOUR: In a research note to investors, Wells Fargo's Nikic downgraded Under Armour to Underperform from Market Perform and lowered his price target on the shares to $13 from $17. The analyst noted that while the athletic apparel/footwear space was one of the strongest sub-sectors in his group coming out of the recession, he now sees several areas for concern that are not only likely weighing on the industry, but also have the potential to accelerate. With consumers having filled their closets with athletic wear over the past seven years, the category "appears poised to take a breather for now," Nikic argued. Furthermore, the analyst pointed out that athletic trends have worsened, with sneaker retailers now underperforming non-athletic shoe stores for the first since the fourth quarter of 2011. Nikic believes the trend change away from performance has left Under Armour "offsides" from a fashion perspective and, unlike Nike, Under Armour still generates most of its revenue in North America, where the athletic space is seeing much more pressure. Additionally, Under Armour's stock valuation "still appears quite lofty," he contended. The analyst also lowered his estimates for Nike, Under Armour, lululemon (LULU) and Finish Line (FINL). NIKE TO THE SIDELINES: Meanwhile, Susquehanna analyst Sam Poser downgraded Nike to Neutral from Positive, stating that his checks indicate that the North American and European businesses are decelerating as some key categories, especially basketball, have underperformed, resulting in excess inventory that will pressure sales and margins. Nike appears to have misjudged the appetite for some key marquee basketball product, which has resulted in supply outpacing demand, he added. Poser told investors that he also believes Nike will provide a new five-year growth plan and push out its $50B revenue target beyond 2020. The analyst lowered his price target on the shares to $54 from $64, and pointed out that the problems facing Nike for the foreseeable future are evident by the guidance reductions from Foot Locker (FL), Dicks Sporting (DKS), Hibbett Sports (HIBB), and Finish Line. Jefferies analyst Randal Konik was also bearish on Nike this morning, lowering his price target on the shares to $49 from $60. According to his survey work, Nike is ceding market share to adidas (ADDYY) in both Europe and the U.S. at an accelerating pace, especially in running. The analyst's webscrape analysis shows Nike has 35 shoes in the top 60 sellers, versus 52 last year, while adidas has risen to 24 styles, versus just two last year. Further, Konik pointed out that Nike promotions are up year over year and are higher than adidas, adding that the former's share in basketball seems to have peaked. He reiterated a Hold rating on Nike's shares, and argued that the company's eroding market share is negative for both Foot Locker and Finish Line. PRICE ACTION: In morning trading, shares of Nike have dropped about 1% to $53, while Under Armour has slipped over 2.5% to under $17 per Class A share.
Sep 19, 2017 | 05:25 EDT
Survey work shows Nike (NKE) is ceding market share to adidas (ADDYY) in both Europe and the U.S. at an accelerating pace, especially in running, Jefferies analyst Randal Konik tells investors in a research note. The analyst's webscrape analysis shows Nike has 35 shoes in the top 60 sellers versus 52 last year, while adidas has risen to 24 styles, versus just 2 last year. Konik expects downward estimate revisions and multiple compression for Nike. He lowered his estimates for the company and cut his price target for the shares to $49 from $60. The shoemaker closed yesterday down 37c to $53.50. The analyst reiterates a Hold rating on the name. Konik also views Nike's eroding market share as negative for both Foot Locker (FL) and Finish Line (FINL).
Sep 18, 2017 | 11:03 EDT
Shares of Finish Line (FINL) are slipping after Piper Jaffray analyst Erinn Murphy downgraded the stock to Underweight, citing above average exposure to hurricane impacted states. Meanwhile, her peer at Wells Fargo argued that Finish Line is currently among the ''least loved'' names in his retail coverage. SELL FINISH LINE: Piper Jaffray's Murphy downgraded Finish Line to Underweight from Neutral, with an $8 price target, as she sees further downside risk to estimates. From a near-term perspective, the analyst told investors that she believes the ongoing impacts of Hurricane Harvey and Hurricane Irma could cause further pressure to third quarter comparable sales and earnings estimates given the company's above-average exposure to these regions. Finish Line has 27% of its store base in Florida and Texas combined, she noted. Additionally, the analyst said that in the first half of the year, 119% of all athletic dollar growth in North America came from vendors selling directly to consumers, which she views as an ongoing threat to the multi-branded athletic retailers who are now firmly in comp-negative territory. Furthermore, Murphy pointed out that athletic trends slowing In North America, and that she believes the lack of needle-moving innovation out of Nike (NKE) has created challenges for retailers. Finish Line may be getting allocations from adidas (ADDYY), she contended, but the significant exposure to Nike could create a headwind for the company for longer. AMONG 'LEAST LOVED': Meanwhile, Wells Fargo analyst Ike Boruchow told investors that it still may be too early to call for a robust recovery in retail fundamentals, but the industry does seem to be stabilizing, with second quarter sales and earnings per share trends generally better than the first quarter across the board. Further, store traffic has improved each month since February and management teams have taken a generally upbeat tone regarding back-to-school in recent public commentary, he added. With solid traffic and favorable weather during the key back-to-school selling season, the analyst pointed out that he believes inventories could find themselves in good shape heading into the holidays and momentum appears to be on retail's side. Boruchow noted that according to his index, PVH Corp. (PVH) continues to be the ''most loved'' retailer in his universe, followed by TJX (TJX), Canada Goose (GOOS), and Steven Madden (SHOO), while Foot Locker (FL), Fossil (FOSL), and Finish Line are the ''least loved'' names this month. WHAT'S NOTABLE: Last week, shares of Finish Line rallied after Susquehanna analyst Sam Poser upgraded the athletic apparel retailer to Positive from Neutral. The analyst told investors that he thinks there is a 75% chance that Finish Line will be acquired, most likely by U.K.-based sporting good retailer Sports Direct for about $13.30 per share. PRICE ACTION: In morning trading, Finish Line has dropped almost 5% to $10 per share.
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