On March 26, 2018, Finish Line (FINL) stock went up 31.1% following the announcement of the company’s takeover by UK-based sportswear retailer JD Sports. Following the announcement, Wedbush Securities, Canaccord Genuity, and Credit Suisse raised their price targets on the stock. Wedbush increased the target price to $13.50 from $12.00, while Canaccord Genuity raised it to $13.50 from the $13.00 projected earlier. Credit Suisse raised the price target to $13.50 from $9.00 and upped the rating to “hold” from “sell.” There could be more price revisions in the coming days.
Currently, analysts’ 12-month average target price for the company is $13.10, which reflects a 5.3% downside to the stock price as of March 26, 2018. As of March 26, 2018, ~86.0% of the 14 analysts covering Finish Line recommended a “hold” rating, while 7.0% rated it a “buy,” and the remaining 7% rated it a “sell.”
A look at Finish Line’s stock price movement
On a YTD (year-to-date) basis as of March 23, 2018, Finish Line stock was down 27.4%. However, with the 31% jump seen on March 26, 2018, Finish Line’s YTD stock price is down just 4.8% as of March 26. In comparison, on a YTD basis, Foot Locker (FL) is down about 3.5% as of March 26, 2018. On the other hand, Skechers (SKX) is up 2.5%, and DSW is up ~4.2% on a YTD basis as of March 26, 2018.
Finish Line continually has cautioned about the highly promotional environment for athletic footwear. Expansion of online commerce, especially by Amazon (AMZN), has been the biggest disruptive factor for the retail sector. Moreover, Nike and Adidas’s D2C (direct-to-consumer) business has hurt the growth prospects of the sportswear retailers.
The company is focusing on its digital platform as well as store openings and remodels. However, with the merger with JD Sports, the company is likely to get a competitive edge in the US athleisure market. According to TheStreet, JD Sports’ relationship with global sports suppliers and manufacturers could give Finish Line a much better scope for deal negotiations.