Ahead of the Bell: Finish Line

NEW YORK (AP) -- Two analysts raised their ratings for Finish Line on Monday, saying the athletic shoe and clothing retailer has the opportunity for margin recovery and a stronger online performance.

Christopher Svezia of Susquehanna Financial Group said in a client note that he thinks Finish Line Inc.'s weakening margins will bottom out in the third quarter, as it has a favorable product mix and easier comparisons coming up.

The analyst boosted Finish Line's rating to "Positive" from "Neutral" and increased its price target to $31 from $22.

Sterne, Agee & Leach's Sam Poser said that until recently, Finish Line's online business was growing fast but not operating efficiently. But the analyst said that the retailer has now "crossed the threshold of scale" for its online business "allowing for greater profitability with increased revenue."

Finish Line's store-in-store deal with Macy's Inc. is also likely to get better over time, Poser said. The company had 189 Finish Line branded shops in Macy's stores at the second quarter's end, which performed very well, the analyst explained.

Poser said Macy's stores that don't yet have Finish Line branded shops have been disappointing because it's taken a long time for Finish Line products to arrive on sales floors and there's no staff telling shoppers about the products. But the analyst said that Finish Line should view this as an opportunity to get better once more of the store-in-store shops are added.

Poser lifted Finish Line to "Neutral" from "Underperform."

Finish Line shares finished at $26.29 on Friday. Its shares have risen 39 percent so far this year.