Deutsche Bank Reiterates Buy On The Finish Line Following Investors Meeting With Management
In a research report issued today, Deutsche Bank analyst Paul Trussell reiterated a Buy rating on The Finish Line (NASDAQ:FINL) with a $32 price target, following meetings with management including CEO Glenn Lyon, CFO Ed Wilhelm, and EVP of Strategic Initiatives Steve Schneider.
Trussell noted, “Top takeaways include: (1) both FINL and Jordan are acting aggressively to address basketball fashion miscue in 2Q with an improved assortment still on deck by the Holidays; (2) GPM in 3Q will be materially impacted by clearance; (3) core running trends remains supported by solid demand and higher ASP; (4) Macy’s is uniquely positioned for strong top-line and margin gains; (5) the Running Co. will break even at ~75 stores; and (6) capex will decline by 10%-15% in each of the next 2 years.”
The analyst continued, “Following the 2Q miss, investor skepticism remains understandably high. Clearly communicated concerns include: (a) can FINL get the proper allocation of basketball product to drive a rebound in performance, especially with such a focus on the Jordan brand (we’ve already started to see the improvement); (b) how significant will markdowns be in 3Q (we’re modeling product margins down 100 bps), (c) can FINL continue to grow at a MSD pace given Nike’s strong direct biz (we believe Yes), (d) will increasing FCF be returned to shareholders or used for more acquisitions & investments (both), and (e) can we be confident that management will get trends back on track (they have before). We answer each question in detail beginning on page 3.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Paul Trussell has a total average return of 12.1% and a 75.5% success rate. Trussell is ranked #203 out of 3337 analysts.