Needham analyst Tom Nikic has maintained their bullish stance on FL stock, giving a Buy rating on May 12.
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Tom Nikic has given his Buy rating due to a combination of factors that make the potential acquisition of Foot Locker by Dick’s Sporting Goods financially and strategically appealing. The reported acquisition price of $24 per share represents a significant 80% premium over Foot Locker’s recent closing price, which is attractive for shareholders. This premium is difficult to achieve independently due to Foot Locker’s historically low valuation multiples.
From Dick’s Sporting Goods’ perspective, acquiring Foot Locker could be beneficial as they would be purchasing a company with underperforming earnings at a reasonable valuation. The acquisition could also lead to operational improvements and cost synergies, helping Foot Locker improve its profit margins. Additionally, the merger would enhance the combined entity’s negotiating power with suppliers and landlords. Dick’s Sporting Goods’ strong private label offerings could further support Foot Locker’s brand ambitions, and Foot Locker’s expertise in athletic footwear aligns well with Dick’s strategic priorities.
In another report released on May 12, Barclays also maintained a Buy rating on the stock with a $14.00 price target.