Foot Locker Stock Gaps Higher After Earnings, Bull Notes

Canaccord Genuity thinks FL's momentum will continue in 2019

Nov 21, 2018 at 10:03 AM
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The shares of Foot Locker, Inc. (NYSE:FL) are signaling a strong session, after the retailer reported stronger-than-expected third-quarter adjusted profit of 95 cents per share on $1.86 billion in revenue -- more than analysts were anticipating. FL also said same-store sales surged 2.9% during the three-month period.

A round of upbeat analyst notes is only strengthening the bullish tailwinds, with no fewer than seven brokerages upping their FL price targets. Canaccord Genuity set the loftiest target at $64 -- a nearly 39% premium to last night's close -- saying the retailer is positioned for continued business acceleration into 2019.

With FL up 15% out of the gate today to trade at $52.80, there's room for more analysts to climb on board the bullish bandwagon. Currently, eight of 17 analysts maintain a "hold" or worse rating on the retail stock, while the average 12-month price target of $58.43 is a slim premium to current trading levels.

One options trader on Monday positioned for a big post-earnings pop. According to Trade-Alert, the speculator initiated a butterfly spread using the December 50-55-60 calls for an initial net debit of 85 cents. If this is the case, the goal is for Foot Locker to settle at $55 -- site of the sold strike -- at December options expiration.

Heading into today's trading, Foot Locker stock had been churning between support at its 320-day moving average -- located near $45, home to its late-May pre-bull gap levels -- and resistance at $53. The shares are now headed for their biggest one-day gain since May 25, but remain below that short-term ceiling. History remains on FL's side, though, considering its one of the best stocks to own during the holiday season.

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