Deutsche Bank Starts TrueBlue (TBI) at Sell
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Deutsche Bank initiated coverage on TrueBlue (NYSE: TBI) with a Sell rating and a price target of $20. Analyst Kevin McVeigh pointed out the stock's 25% rally.
"While we like this business model, we believe the stock has rallied too much — +25% — from the Amazon-related 2016 guide-down in Q1 and the Street has to become more comfortable with estimates — which we believe need to come down and require management execution — before we are more balanced on the TBI stock. Further, we believe Trueblue could be one of the first to see a downturn. That said, it is likely the first to come out, as Trueblue had peak earnings in 2006, vs. Robert Half and Resources in 2007, and Manpower in 2008. Our cycle analysis suggests we are closer to the peak than the trough. That said, branches at Trueblue are essentially variable cost due to the ease with which it takes to close them. As such, Trueblue can preserve earnings if things get much tougher than we expect," said the analyst.
Shares of TrueBlue closed at $22.95 yesterday.
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