(RTTNews) - Monday, Credit Suisse upgraded Abercrombie & Fitch Co. (ANF: News ) shares to Outperform from Neutral and increased its price target to $49 from $30. The brokerage raised its 2009 EPS estimate to $1.30 from $1.11, and its 2010 estimate to $2.17 from $2.00.

Analyst Lejuez upgraded the stock and increased estimates based on higher than anticipated flagship and international Hollister stores' revenue/margin contribution. ANF reported an in-line October comp of down 15%, but new space productivity came in higher than expected, driven by international Hollister stores, the Milan flagship opening and e-commerce. This gives the analyst greater confidence that the company can beat earnings expectations in third quarter of 2009, fourth quarter of 2009 and fiscal 2010.

While the analyst has always thought the market underappreciated the near term international impact, the increasing spread between total sales growth and comps indicates international Hollister locations and the SoHo and Milan flagships are driving even higher revenues than he previously estimated, and the Tokyo flagship is not even open yet.

The analyst believes the combination of Ruehl closing and incremental revenues from fiscal 2009/2010 flagship and international Hollister openings would drive $1.14 in incremental EPS in fiscal 2010. The analyst's estimates does not assume any turnaround in the U.S. business, although recent months give us more comfort that stabilization in fiscal 2010 is likely.
The analyst believes ANF would beat third quarter of 2009 EPS, to be reported November 13, his estimate at $0.22 vs. consensus of $0.20, and upside to fourth quarter would become more clear, his estimate at $1.34 vs. consensus of $1.01, driven by international strength.

Currently, ANF is up $2.56 or 7.31% and trading at $37.57.

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by RTT Staff Writer

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