Cowen and Company also cut FL's price target to $34 from $42
Foot Locker, Inc. (NYSE:FL) stock was last seen down 5% to trade at $28.98, after Cowen and Company downgraded the equity to "market perform" from "outperform," and cut its price target to $34 from $42. The analyst in coverage said supply chain pressures and wage inflation could impact the cost of goods, should there be no meaningful same-store sales recovery in 2023. The firm also noted Foot Locker is being searched on Google roughly 14% less than a year ago, which could impact its ability to take advantage of improved inventory flow.
Cowen and Company joins an already bearish brokerage bunch. Coming into today, 11 of the 13 analysts covering FL carried a tepid "hold" or worse rating, while only two said "strong buy." Short sellers have piled on, too, with short interest up 25.4% in the last reporting period. The 6.76 million shares sold short make up 6.8% of the stock's available float.
The options pits echo that pessimism. At International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Foot Locker stock sports a 50-day put/call volume ratio that sits higher than 96% of annual readings. This means long puts have been getting picked up at a much quicker-than-usual pace over the last 10 weeks.
Now may be an opportune time to bet on the security's next move with options. This is per FL's Schaeffer's Volatility Index (SVI) of 41%, which sits in the low 19th percentile of its 12-month range. In other words, options traders are pricing in relatively low volatility expectations at the moment.
Foot Locker stock's latest rally lost steam at the $33 mark, with the the 20-day moving average pressuring the shares lower. The equity is today testing a floor at the $29 mark, and sports a 49.6% year-over-year deficit, as it paces for a fourth consecutive daily loss.