Jefferies Raises Earnings Estimates on Finish Line (FINL), Aggressively Buy Under $20/Share

Jefferies is reiterating its Buy rating and $25 price target on shares of Finish Line (NASDAQ: FINL) following the release of its third quarter earnings.

The firm reports investors are reacting overly negative to the gross margin miss, while not accounting for the sales upside and that earnings fell inline. Bears are driving the stocks price down as they believe Finish Line is in a mature phase of its business cycle and that margins are likely at their peak. The weaker gross margin was due to NCAA fleece price increases and planned liquidation of private label apparel, states Jefferies.

Analysts at Jefferies strongly recommend buying shares of FINL if they fall below $20 per share.

An analyst at the firm comments, "While not as profitable as some would like today, this channel should be the future of retail and will likely soon reach a positive margin inflection. E-com is a higher GM% and higher SG&A model. The growing mix of e-com is SG&A by about 50-75 bps. Those who look at "an elevated SG&A" and are missing the mix story, in our opinion."

Jefferies highlights, the company's online business looks to account for 50 percent of total comp growth for the year and 100 percent for the month of December. The company's e-commerce sales business is up 60 percent for the year.

For FY12 and FY13, the firm is increasing its EPS estimates from $1.60 and $1.70 to $1.61 and $1.75. The Street is currently forecasting EPS of $1.58 and $1.75 for the two years.

For an analyst ratings summary and ratings history on Finish Line click here. For more ratings news on Finish Line click here.

Shares of Finish Line closed at $20.70 yesterday.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• CrowdStrike (CRWD) PT Lowered to $227 at Scotiabank
• Walmart (WMT) PT Lowered to $115 at Wolfe Research
• Wells Fargo Upgrades Portland General Electric Company (POR) to Overweight