Tuesday, FBR Capital Markets upgraded Gymboree Corp. (GYMB) shares to Outperform and increased its price target to $59 from $46. The brokerage raised its 2009 EPS estimate to $3.34 from $3.31, and its 2010 estimate to $3.67 from $3.56.
Analyst Adrienne Tennant upgraded the stock based on market share gains from compelling product, best-in-breed management, accelerating unit growth, potential return to sustained positive comps, and valuation still compelling in his opinion.
Since the consumer product safety issues earlier in the year, GYMB has executed a remarkable recovery, embarking on a series of "beat and raises" and regaining investors' confidence. Looking towards third quarter of 2009, the analyst believes guidance of $0.95 to $1.03 off a negative low-single-digit comp will prove conservative.
The analyst's store checks show controlled inventory and markdowns, well-timed and compelling promotions, and strong traffic and conversion. Further, GYMB has now joined the ranks of a limited number of retail "growth" stories with its expansion plans for Crazy 8.
The analyst believes Crazy 8 has shown material improvement since last year; on the call, management noted it expects the concept to break even in third quarter of 2009. The analyst applaud management for rapidly addressing issues and having come a long way in a short time since the consumer product safety issues earlier in the year.
While the analyst recognizes the massive run in share price to all-time highs, he believes there remains upside to fiscal 2009 and fiscal 2010 consensus estimates, and valuation remains compelling. Shares trade at 13.7x the analyst's fiscal 2010 estimates compared to the peer average 21.4x.
The analyst is convinced that in the near term, the business momentum will continue, and in the longer term, the growth story will be extremely compelling. The analyst believes the upcoming September sales update will underscore ongoing inventory and cost control, as well as solid business momentum thus far in the quarter.
Currently, GYMB is up $0.87 or 1.74% and trading at $50.98.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.