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Why Foot Locker Stock Jumped 5.5% on Friday

By Reuben Gregg Brewer - Updated May 8, 2020 at 11:54AM

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The athletic shoe retailer got a little assist, and investors leaped in on the news

What happened

Shares of athletic shoe retailer Foot Locker (FL 0.06%) moved higher by roughly 5.5% in early stock market trading on Friday. Although there was no particular news from the company, there was some word from an analyst. And, of course, there was the ongoing reopening of the U.S. economy.

So what

Raymond James lowered its stock price call on Foot Locker from $50 per share to $30. Normally that would be seen as a pretty big negative, but with COVID-19 still disrupting the normal functioning of the retail sector, these aren't normal times. In fact, the broker maintained its outperform rating on Foot Locker, explaining that it remains exceptionally well positioned for success when it comes to selling premium athletic footwear. A gain in market share was floated as a likely outcome of the current retail upheaval.   

A woman looking at sneakers in a shoe store

Image source: Getty Images

Which brings up a second positive. Investors appear increasingly upbeat about the reopening of the economy following coronavirus-related shutdowns. Although it's likely to be a slow process, things aren't looking quite as bleak as they were just a few weeks ago. With that as a broader backdrop, it's easy to see why investors would view Raymond James' upbeat outlook as a big positive for Foot Locker's stock.

Now what

Foot Locker will report earnings on May 22, and the news probably won't be great, given the economic shutdowns related to COVID-19. In fact, the second quarter, which is already underway, is probably going to be affected as well. So investors buying Foot Locker stock need to think long term here. But if Raymond James is right, and the economy keeps moving toward a more-normal operating level, this specialty retailer could be worth a deep dive.   

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Foot Locker, Inc. Stock Quote
Foot Locker, Inc.
FL
$32.45 (0.06%) $0.02

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