Friday, FBR Capital Markets upgraded AnnTaylor Stores Corp. (ANN) shares to Outperform from Market Perform and increased its price target to $19 from $13. The brokerage raised its 2010 EPS estimate to $0.31 from $0.19, while maintaining its 2009 loss estimate of $0.13.
Analyst Adrienne Tennant upgraded the stock based on what he believes to be a replenishment cycle for the missy consumer, ongoing inventory and cost control that should drive margins in the near term, until there is sustained top-line improvement, and product improvement that is evident at the Loft division and is a work-in-progress at the Stores division.
While the stock clearly reflects the progress made in stabilizing margins and returning to sustained profitability, the analyst continues to point out that on an EV/sales basis, the stock remains among the least expensive names in his universe, trading at roughly 0.4x EV/sales on his fiscal 2010 estimate.
The analyst continues to believe that the company could well progress towards sustainable positive comps over the next 12- to 18-month period. In the analyst's opinion there are still many fundamentally driven catalysts ahead, including return to sustained profitability, return to margin expansion, and return to sustained positive comp trends.
The analyst believes the Loft merchandise has already shown vast improvement and now look to the Stores division as an opportunity for significant merchandise improvement. Once the "breadwinner" of the family at over 50% of total sales, the Stores division's year-to-date sales contribution has fallen to under 25% of total sales.
The analyst believes that if the Stores division can successfully reconnect with its core customer, there is a great deal of market share to be gained at this division. The analyst increased his 12-month price target from $13 to $19, which represents an EV/sales multiple of 0.6x his fiscal 2010 sales estimate of $1.7 billion.
Currently, ANN is up $0.24 or 1.55% and trading at $15.70.
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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.