Finish Line Dropped To Hold At Deutsche On Limited Price Target Upside

Deutsche Bank has downgraded Finish Line Inc (NASDAQ: FINL) to Hold from Buy as it sees limited upside to its $24 price target despite the company being on "the right path to stable top-line productivity and DD EPS growth."

"We believe new CEO Sam Sato and new Chief Merchant John Hall are improving vendor relationships, and store closures and remodels should aid SSS and margins," analyst Paul Trussell wrote in a note.

"We see reasons to think supply chain issues are finally behind us, and comScore indicates a digital pick-up in June and July. Finally, FINL laps easy SSS and GPM compares ahead," Trussell continued.

However, the stock has also gained about 50 percent since January 2015 lows due to investor optimism on the company's prospects.

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"At today's levels and with the Street embedding mid-teens EPS growth next year, we think the stock has no room for excuses around execution shortfalls, especially in 3Q as mgmt. has set the bar at recapturing all of LY's supply chain losses (HSD-LDD SSS)," Trussell noted.

Meanwhile, Trussell also reiterated his second-quarter estimate of $0.55 in EPS ($0.02 above the Street) and 3 percent same-store sales growth. The company is expected to report its second quarter numbers on September 23.

That said, the analyst continues to expect FY16 EPS of $1.57 (Street $1.54, guidance $1.50–$1.56) with SSS 4.3 percent (Street 3.8 percent, guidance 3–5 percent).

Shares of Finish Line closed Friday's trading at $23.40. In the pre-market hours on Monday, they fell 3 percent to $22.69.

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