"We are lowering our rating on Foot Locker from BUY to HOLD based on our expectations for a slowdown in comp sales and EPS," Argus analyst John Staszak wrote. "We believe that it will be difficult for Foot Locker to reach its goal of mid-single-digit comp growth in the second half of FY18 given its heavy reliance on Nike products, which account for more than two-thirds of FL sales."
Staszak noted that sales of Nike footwear have "softened" following a robust five-year run, and now inventories remain high.
"In addition, Foot Locker is seeing weak results in its direct-to-consumer business (13% of revenue), and has been forced to cut prices on its web site. We do not expect a strong recovery in this business in the near term," he added.
Shares of Foot Locker were climbing higher during afternoon trading on Wednesday.
What's Hot on TheStreet
Respect the stock charts: Don't feel too relieved by volatile tech name Nvidia (NVDA) finishing in the green on Monday after a violent selloff.
Nvidia underwent a "key reversal" on Friday that could send the stock plunging another 36%, BMO technical analyst Russ Visch said in a new note. Visch points out that normally, these pullbacks tend to lead to the stock falling back to its 200-day moving average. In the case of Nvidia, the 200-day moving average is $96.70, or $36% below Monday's closing price of $149.97. "Considerable downside risk exists here," said Visch.
On Friday, shares of Nvidia were off to another big rally, hitting new all-time highs of $168.50 following an analyst pontificating the stock could surge to $300. But the party abruptly ended Friday afternoon and continued into most of Monday's trading session. The reversal in one of the hottest tech stocks around spooked the market, pressuring shares of other high-flyers in the space such as Amazon (AMZN) and Apple (AAPL) .
Apple and innovation: The reality of the here and now is that the public and would-be buyers of Apple's stock harbor greater doubts about Apple's ability to innovate than in many years, reports TheStreet. Apple did nothing to quiet those concerns by introducing its new voice activated speaker, sources explained to TheStreet.
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