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Foot Locker stock ticks up as Credit Suisse upgrades shoe retailer to Outperform

Yahoo Finance Live checks out Foot Locker shares following a stock upgrade by Credit Suisse analysts.

Video Transcript

DAVE BRIGGS: And my play is Foot Locker, ticker FL. Shares jumping today after an upgrade from Credit Suisse to outperform from neutral and raising their price target to 62 from 38. The note reading, quote, "We see consistent evidence that the Nike relationship is improving. And we're increasingly convinced that the planned pullback from FL will be far less damaging than we initially expected." They added, since new CEO Mary Dillon started, we've seen consistent signals that the relationship has entered a more collaborative phase.

The footwear retailer also announced earlier this week at a regulatory filing it has, quote, "eliminated a number of corporate and support roles." Also expects to save 18 million annually as a result. Shares flat over the last 12 months, but off to a very fast start to 2023, and look at today, a spectacular performance off of this news, up 4 plus percent. Looking like Mary Dillon is leading quite the turnaround in a very short period of time. She just showed up.

SEANA SMITH: Yeah, and there was a lot of optimism-- we saw it in the stock's reaction-- after she was named CEO, so really following through on that excitement, making some necessary changes that clearly Foot Locker have been needing now for quite some time. Credit Suisse isn't alone. They're one of two buy ratings on the Street right now when it comes to Foot Locker. Majority of analysts, those 16 have a hold rating on the stock right now. I think given the environment right now, given the fact that consumers are pulling back their spending, the turnaround, yes, it is in motion, but I think it's far from over. There's still lots of questions out there about what exactly Foot Locker is going to look like here

ALLIE CANAL: Yeah, and it's clear the Street loves Dillon. Wedbush was out with a note last week saying that this refresh was really needed, and she's really come in there. She's elevated their executive suite. She's really tried to streamline the business. But my question is, do people still go to Foot Locker? I don't.

DAVE BRIGGS: I agree with you there.

SEANA SMITH: I don't, no.

ALLIE CANAL: I don't really see a--

DAVE BRIGGS: And that's where Nike has such a distinct advantage in terms of their digital operation, which is where people are buying sneakers, proverbially, on that sneakers app. That's where we buy them. You're right. It's a good point.

SEANA SMITH: Unless they have the huge drops. Then you're seeing those lines down the block all over New York City--

ALLIE CANAL: Mm-hmm, that's true.

SEANA SMITH: --at their Foot Locker location right in Manhattan. All right--