Brean Capital Reiterates Buy on Finish Line (FINL) Following 2Q Report
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Brean Capital reiterated a Buy rating and $24.00 price target on Finish Line (NASDAQ: FINL) following the company's 2Q earnings report. FINL's 2Q print came relatively in line, with adjusted EPS of $0.53 a penny below consensus, as better-than-expected comp growth of +5.1% (vs. consensus' +3.9%) was mostly offset by softer-than-expected gross margin, which was down nearly -170 bps.
Analyst Eric Tracy commented, "We are maintaining our constructive stance on shares of FINL following 2Q's relatively in-line print (EPS of $0.53 slightly below our $0.55 estimate, with better comp performance and solid expense management mostly offset by weaker-than-expected GM), and believe FINL can deliver in 2H given 1) improving vendor allocations, and 2) material rev/ margin re-capture opportunity following last year's supply chain snafu. Layering in manifesting benefits from an improved operating model (cost structure optimization, rationalization of B&M footprint, and remodels), we think shares can continue to grind higher, even as we acknowledge risk/reward has been somewhat neutralized (even following Friday's -5% intraday pullback) by shares +25% from our 12/23 upgrade. Accordingly, we are tweaking our estimates slightly (now modeling FY18 EPS of $1.77 vs. prior $1.76), with our unchanged $24 TP still based on shares trading 14x our FY18 EPS estimate."
Shares of Finish Line closed at $22.75 yesterday.
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