Monday, June 1, 2009

Retail sector upgrades



AlphaNinja - Abercrombie & Fitch (ANF) upped to Buy from Neutral at FBR, after the company finally relents and puts up "clearance" signs at its flagship stores. Citing ANF's "change in promotional strategy," among other things, the FBR analyst raises her price target from $21 to $37. No that's not a typo - the shares are apparently worth 76% more today than they were yesterday, thanks to the company's promotional stance. Ummm.....




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AlphaNinja - Standpoint Research upbeat on Perry Ellis (PERY). They're not enamored with the company, but see a possibility for it to trade up to a mediocre valuation, from the current awful valuation, which would double the stock price. Could be onto something....

"Firm estimates co has 2.00 in earnings power if and when recession has passed. Firm warns PERY isn't a high quality name; ROE, NPM, earnings purity, revenue and EPS growth are all below average. Debt/capital is high at 48%. Shares are trading at less than 0.15X sales and 0.4X book value. Historically, PERY has traded at 0.3X-0.6X sales and 0.8X-1.4X book value."


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