Foot Locker (NYSE:FL) was downgraded to Neutral from Buy, with an unchanged price target of $27 per share at BTIG in a note Tuesday.
Analysts told investors that macro and competitive headwinds set the stage for a gradual return.
"Shares have rebounded over 30% off the August lows post the Q2 report, despite our expectation that the upcoming Q3 report (11/29, BMO) will point to unchanged fundamentals (with potential risk to near term and '24E EPS)," the analysts explained.
As a result, the firm is taking the opportunity to step to the sidelines despite continuing to believe in the "significant low-hanging fruit at FL and the company's potential as CEO Mary Dillon implements her playbook."
"We believe the turn is likely to be more gradual than anticipated given 1) ongoing macro headwinds (including the resumption of student debt payments); 2) the reduction in Nike (NYSE:NKE, Not Rated) allocations, which will take some time to be fully offset by growth in other brands; 3) growing competition from other retailers (as well as those brands' own DTC businesses)," the analysts added.
FL shares are down over 2% Tuesday, trading below the $23 per share mark.