FBR Capital Remains Bullish After Meeting with Finish Line (FINL) Management
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FBR Capital reiterated an Outperform rating and $25.00 price target on Finish Line (NASDAQ: FINL) after meeting with management. FINL expects to claw back EBIT margin in F2H17. In addition to EBIT clawback, FINL has significant opportunity to get back to HSD EBIT margin from store rationalization, a potential JackRabbit (JR) spin-off, and Macy's expansion.
Analyst Susan Anderson commented, "We recently hosted very upbeat meetings with CFO Ed Wilhelm. Our meetings confirmed FINL has significant opportunity to get back to HSD EBIT margin and is well positioned to benefit from a strong casual cycle and potentially a return of performance running. Since Sam Sato took over as CEO earlier this year, he has started a new store design, revamped the product mix, strengthened relationships with brands, brought in several new executives, began optimizing the store base, and made investments (digital, supply chain). We believe Mr. Sato is setting the stage for a multiyear turnaround and return to HSD EBIT margins. This could lead to $2.16+ in earnings power by F2018 (FBR/consensus currently at $1.81/$1.76). We reiterate our Outperform rating and would be aggressive buyers, particularly as the stock is now about 15% below its recent peak and trading under 12x FY2 P/E."
Shares of Finish Line closed at $20.91 yesterday.
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