Cowen's Foot Locker Bull Case: 'Significant Potential'

Foot Locker, Inc’s FL stock valuation seems attractive given the durability of the company’s competitive position and its stake in GOAT Group, known for its online sneaker offerings, according to Cowen Consumer Tracker Survey.

The Foot Locker Analyst: John Kernan upgraded Foot Locker from Market Perform to Outperform and raised the price target from $38 to $55.

The Foot Locker Thesis: Foot Locker is the most preferred retailer to purchase sneakers for the 18-34 age group, according to the Cowen Consumer Tracker Survey, Kernan said in a Thursday upgrade note.

Foot Locker’s $100-million investment in GOAT Group is estimated to give the company a stake of between 10% to 18%, the analyst said.

“GOAT's recent Series E financing valued the company at $1.75B. Assuming GOAT does not increase further in value, FL's EV, which has only $129MM of debt outstanding, is roughly $2.5B. We note StockX was recently valued at $2.8B following a Series E financing of $275MM,” he said. 

Foot Locker has “significant potential in sneaker and streetwear resale,” Kernan said, adding that the company’s earnings could grow to around $7 per share by fiscal 2024, with the dividend being raised to $2.21.

FL Price Action: Shares of Foot Locker were trading at near-flat at $43.57 Thursday.