The firm said it raised its rating on the athletic shoes and apparel retailer as it believes Finish Line will see an acceleration it its margin recovery.
Canaccord Genuity upped its price target on Finish Line to $33 from $26.
"We believe the issues that drove the decline in merchandise margins last year are nearing an end, resulting in a faster margin recovery than current estimates or guidance imply," the firm said in an analyst note.
"In addition Finish Line should benefit from an improved assortment of running product that more closely matches current casual demand trends as well as an increased allocation of key basketball styles," the note continued.
Shares of Finish Line closed at $26.44 on Friday afternoon.
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, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow."
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 9.1%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- 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 $1.71 versus $1.56 in the prior year. This year, the market expects an improvement in earnings ($1.76 versus $1.71).
- 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.89 is somewhat weak and could be cause for future problems.
- 35.93% is the gross profit margin for FINISH LINE INC which we consider to be strong. Regardless of FINL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.40% trails the industry average.
- You can view the full analysis from the report here: FINL Ratings Report