Deutsche Bank just slashed FL's price target to $51
Foot Locker, Inc. (NYSE:FL) has been struggling to gain traction on the charts for the better part of the year, shedding nearly 14% in the past 12 months. And though the stock is testing its year-to-date breakeven level today, multiple factors are conspiring against the retailer. For one, the equity received a price-target cut from Deutsche Bank to $51 from $72 yesterday. In addition, shares just came back within striking distance of a trendline that's had bearish implications for FL in the past.
The trendline in question is FL's 80-day moving average. According to a study from Schaeffer's Senior Quantitative Analyst Rocky White, the stock has come within one standard deviation of this trendline five other times in the past three years. The equity saw a negative one-month return after 80% of these signals, averaging an 11.1% drop during that time period. Last seen down 1.4% at $43.42, a similar move from its current perch would put FL just above the $38 level, which hasn't been touched in just over one year.
Deutsche Bank's bear note put the stock's 12-month consensus price target at $59.55, which is still a 36.5% premium to current levels. Other analysts could follow suit, especially considering six of the 12 in coverage consider the stock a "strong buy," compared to four "hold" ratings, and just two "sell" or worse recommendations.
Foot Locker is set to report its fourth-quarter earnings before the open on Friday, Feb. 25, and the stock's post-earnings history is mixed. FL fell following four of its last eight reports, including a 12% drop in November. Regardless of direction, the security has averaged a 6.6% next-day swing, which is smaller than the 11% move the options pits are pricing in this time around.