Barclays upgrades Foot Locker to Overweight on fundamental inflections

Barclays upgraded Foot Locker to Overweight from Equal Weight with a price target of $34, up from $27. The company’s Q2 results showed evidence several fundamental inflections, including a return to sustainable positive comps setting the stage for fixed-cost leverage, an inflection in merchandise margins and ongoing improvement in the sales-to-inventory spread, the analyst tells investors in a research note. The firm believes the positive impacts of a fundamental business recovery will result in earnings and margin upside over the next 12 to 18 months, before any potential disruption from the headquarters move. Barclays sees an attractive risk/reward at current share levels.