NEW YORK (TheStreet) -- Shares of Finish Line Inc. (FINL) are down by 1.28% to $23.05 in pre-market trading on Monday, following a pair of analyst downgrades at Canaccord and Janney Capital this morning.
Canaccord downgraded the mall-based sports apparel and fitness retailer to "hold" from "buy" and set a $25 price target on the stock, down from $32.
The firm said it lowered its rating on Finish Line based on its belief "challenges in the running category are intensifying and will likely result in continued markdown pressure well into 2015."
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Janney Capital reduced its rating on Finish Line to "neutral" from "buy" as it believes higher promotions are cutting into the company's margins.
Janney has a $25 price target on Finish Line stock.
Separately, TheStreet Ratings team rates FINISH LINE INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FINISH LINE INC (FINL) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- FINL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
- FINISH LINE INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FINISH LINE INC increased its bottom line by earning $1.56 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $1.56).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: FINL Ratings Report