Deutsche Bank Sets A New Sell Rating On Trueblue Shares

Deutsche Bank’s Kevin McVeigh believes Trueblue Inc TBI shares have “rallied too much,” rising 25 percent since the company lowered its guidance in Q1.

McVeigh initiated coverage of the company with a Sell rating and price target of $20.

Execution Needed

Mentioning that he liked Trueblue’s business model, the analyst noted that “the Street has to become more comfortable with estimates — which we believe need to come down and require management execution — before we are more balanced on the TBI stock.”

Related Link: Deutsche Bank Initiates On Assignment Shares With A Buy Rating

McVeigh also believes the company could be one of the first to witness a downturn, although it is also likely to be the first to come out of a downturn, given that Trueblue has peak earnings in 2006.

Closer To Peak

“Our cycle analysis suggests we are closer to the peak than the trough. That said, branches at Trueblue are essentially variable cost due to the ease with which it takes to close them,’ the analyst stated, while adding, “As such, Trueblue can preserve earnings if things get much tougher than we expect.”

Full ratings data available on Benzinga Pro.