Ahead of the Bell: Finish Line

NEW YORK -- A Sterne Agee analyst on Monday raised his rating for Finish Line Inc. to "Neutral" from "Underperform," citing the athletic footwear company's new deal that will put its athletic footwear shops in more than 450 Macy's stores in the U.S.

Financial terms were not disclosed, but Finish Line said it expects the agreement to boost its annual sales by $250 million to $350 million.

Under the terms of the agreement, the Indianapolis-based company will be Macy's exclusive partner for men's, women's and kids athletic footwear and Macy's will be the exclusive host for Finish Line-branded in-store shops.

The leased Finish Line departments will start to appear in Macy's Inc. stores during the spring of 2013, with the full rollout likely complete by the fall of 2014. Athletic footwear chosen by Finish Line will also begin appearing on Macy's website starting in the spring of 2013, subject to the signing of a final online agreement.

Also on Friday, Finish Line reported better-than-expected fiscal second-quarter results and raised the high end of its fiscal 2013 earnings forecast.

Analyst Sam Poser said that while the company continues to spend more than it probably should, offsetting a double-digit increase in its revenue at stores open at least a year, it should get a significant boost from the deal with Macy's.

"The agreement with Macy's will likely be a game changer, though we will not be able to forecast the extent of any accretion until more details are provided," Poser wrote in a note to investors. "So we have decided to wait on the sidelines until we learn more."

Finish Line shares closed at $22.73 on Friday. Its shares are up 27 percent from a 52-week low of $17.87 in late June. They are approaching their high for the past year of $26.16 set on March 26.