Sterne Agee Has Buy on Foot Locker

Sterne Agee is out with a research report on Foot Locker, Inc. (NYSE: FL) and it has a Buy rating and a $30 price target on shares.

In a note to clients, Sterne Agee writes, "We maintain our FY11 & '12 EPS estimates of $1.79/$2.12. We believe our estimates could prove conservative given the strong momentum in the technical and lightweight running footwear categories, as well as the strength from marquee basketball and the operational changes FL has made. We also do not believe FL management would have guided to numbers they couldn't largely hit out of the ballpark. FL plans to close 55 stores and open 60 new stores in 2011 with the majority of the growth in Europe. The European stores are smaller and are highly productive and we expect these stores to drive higher margins going forward, despite the macro concerns in that market, and the Olympics next summer will likely provide a catalyst. Strong inventory control, mix shift towards higher margin apparel, improved operational efficiencies, and improved “mojo” as employees have become more empowered leading to strong store-level execution and a better shopping experience, not to mention an athletic cycle that likely has another few years of strength."

Shares of FL lost 95 cents yesterday to close at $21.09, a loss of 4.3%.