Finish Line Slides After Analyst Says Sell In Hurricane Aftermath

Shares of Finish Line (FINL) are slipping after Piper Jaffray analyst Erinn Murphy downgraded the stock to Underweight, citing above average exposure to hurricane impacted states. Meanwhile, her peer at Wells Fargo argued that Finish Line is currently among the ''least loved'' names in his retail coverage.

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SELL FINISH LINE: Piper Jaffray's Murphy downgraded Finish Line to Underweight from Neutral, with an $8 price target, as she sees further downside risk to estimates. From a near-term perspective, the analyst told investors that she believes the ongoing impacts of Hurricane Harvey and Hurricane Irma could cause further pressure to third quarter comparable sales and earnings estimates given the company's above-average exposure to these regions. Finish Line has 27% of its store base in Florida and Texas combined, she noted. Additionally, the analyst said that in the first half of the year, 119% of all athletic dollar growth in North America came from vendors selling directly to consumers, which she views as an ongoing threat to the multi-branded athletic retailers who are now firmly in comp-negative territory. Furthermore, Murphy pointed out that athletic trends slowing In North America, and that she believes the lack of needle-moving innovation out of Nike (NKE) has created challenges for retailers. Finish Line may be getting allocations from adidas (ADDYY), she contended, but the significant exposure to Nike could create a headwind for the company for longer.

AMONG 'LEAST LOVED': Meanwhile, Wells Fargo analyst Ike Boruchow told investors that it still may be too early to call for a robust recovery in retail fundamentals, but the industry does seem to be stabilizing, with second quarter sales and earnings per share trends generally better than the first quarter across the board. Further, store traffic has improved each month since February and management teams have taken a generally upbeat tone regarding back-to-school in recent public commentary, he added. With solid traffic and favorable weather during the key back-to-school selling season, the analyst pointed out that he believes inventories could find themselves in good shape heading into the holidays and momentum appears to be on retail's side. Boruchow noted that according to his index, PVH Corp. (PVH) continues to be the ''most loved'' retailer in his universe, followed by TJX (TJX), Canada Goose (GOOS), and Steven Madden (SHOO), while Foot Locker (FL), Fossil (FOSL), and Finish Line are the ''least loved'' names this month.

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