Foot Locker (NYSE:FL) stock rose sharply on Wednesday after Credit Suisse raised its forecasts for the footwear retailer.
The bank’s analysts indicated that while the stock has performed well to start 2023, sentiment remains overly bearish. Namely, the team believes narratives about negative impacts from Nike (NYSE:NKE) pulling away from the retailer are overblown.
“We see consistent evidence that the Nike relationship is improving, and we’re increasingly convinced that the planned pullback from FL will be far less damaging than we initially expected,” the team told clients. “Since new CEO Mary Dillon started, we’ve seen consistent signals that the relationship has entered a more collaborative phase.”
The bank hiked its rating on the stock to Outperform from Neutral and raised their price target to $62 from $38.
The athletic store chain was in the news last week after made the strategic decision to wind down its Sidestep banner in Europe, consistent with the retailer's broader efforts to focus on its core and growth banners.
In addition, Foot Locker said it eliminated a number of corporate and support roles as part of streamlining the organization and enhancing operational efficiency. As a result of these role eliminations, the company expects to realize cost savings of approximately $18 million on an annualized basis beginning in fiscal year 2023.
Shares of Foot Locker rose 90 cents, or 2.1%, to $44.41 in Wednesday trading.
