These Monday Stock Movers Kept Wall Street on Its Toes

The stock market has been on pins and needles lately, but Monday brought some relief. As a new twist, the Dow Jones Industrial Average (^DJI -0.11%) led the way higher, with the S&P 500 (^GSPC 0.02%) also seeing sizable gains. The Nasdaq Composite (^IXIC 0.10%) inched higher as well but lagged behind its index peers.

Data source: Yahoo! Finance.

A pair of stocks saw significant moves on Monday. Foot Locker (FL 2.83%) released its latest financial report, and although the company has made some progress with its broader strategic initiatives, it still believes that 2023 might not work out as well as investors had hoped. Meanwhile, solar microinverter system specialist Enphase Energy (ENPH -5.56%) got a vote of confidence from Wall Street that sent its shares higher.

Foot Locker could hit the wall in 2023

Shares of Foot Locker fell 6% on Monday. The athletic apparel and footwear retailer released its fiscal fourth-quarter financial results for the period ending Jan. 28 in advance of its investor day presentation, and while investors were generally satisfied with how the holiday season went, they were worried about what the coming year could bring.

Foot Locker's financial results for the quarter were mixed. Revenue fell 0.3% year over year to $2.33 billion, with foreign exchange fluctuations putting almost four percentage points of downward pressure on sales growth. Comparable-store sales were up 4.2%, however, with increased traffic and higher-quality inventory helping to bolster strength across the company's business segments.

Still, a huge boost in promotional activity caused gross margin to fall by nearly three percentage points. That played a key role in making Foot Locker's bottom line fall sharply, with adjusted earnings of $0.97 per share down by roughly a third from year-ago levels.

Those results were actually better than some had feared. However, what really seemed to hit investor sentiment was Foot Locker's financial outlook for 2023. The retailer said that it expects comparable sales to be down 3.5% to 5.5% from 2022 levels, pushing overall revenue down by a similar amount. Full-year adjusted earnings should come in between $3.35 and $3.65 per share, which would be down sharply from $4.95 per share of earnings in 2022 and $7.27 per share in 2021.

Investors have feared that consumers would pull back from discretionary purchases. Foot Locker appears to be warning investors of exactly that, and the stock responded negatively.

Enphase shines

Meanwhile, shares of Enphase Energy moved higher by 5%. The solar power system equipment specialist got an upgrade from analysts that reflected their belief that the stock has fallen too far too quickly.

Analysts at Raymond James were optimistic about Enphase on Monday, boosting their rating on the stock from market perform to outperform. They also set a price target on the stock of $225 per share, implying a fair amount of further room to rebound.

Raymond James admitted that it is making a dangerous recommendation of a stock that has fallen 40% just since December. However, the analysts believe that Enphase's exposure to Europe is a positive, particularly because European countries have seemed more willing to offer extensive subsidies in order to encourage renewable energy transition measures.

The time to buy high-growth stocks like Enphase is when most investors think there might be something wrong. Enphase certainly entails risk, but if you still believe in the long-term prospects for solar power, then the industry leader in microinverter and related equipment is worth a closer look.