Foot Locker shares may look cheap after a pullback this year, but Cowen says investors should stay away. Cowen downgraded Foot Locker to market perform from outperform. The firm also cut its price target on the stock to $34 from $42. The new projection implies 11.5% upside from Friday's close. The shoe retailer is underperforming the market this year, down 30.1%. "Valuation for mall based businesses are converging at all-time lows, and we do not see a financial catalyst for change," Cowen's John Kernan said. Foot Locker's mall locations comprise 79% of its North America store base in fiscal year 2021, which "weighs on results and valuation," Cowen said. Google search and website traffic through the beginning of March is on a downward trend, Cowen found. Google search is on average 14% lower year over year, while footlocker.com traffic has seen a three-month average year-over-year decline for nine consecutive months. "Without better traffic (digital and in-store) the business may not take advantage of improved inventory flow in 2H," Kernan said. Shares dipped more than 1% in the premarket Monday. —CNBC's Michael Bloom contributed reporting.
Shoppers stand in line to enter a Foot Locker Inc. store at the Queens Center shopping mall in the Queens borough of New York, U.S., on Wednesday, Sept. 9, 2020.
Peter Foley | Bloomberg | Getty Images
Foot Locker shares may look cheap after a pullback this year, but Cowen says investors should stay away.