This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Abercrombie Soars on BofA Upgrade

NEW YORK (TheStreet) - Provocative teen retailer Abercrombie & Fitch (ANF) spiked more than 5% Friday as Bank of America/Merrill Lynch upgraded the shares to 'buy' from 'neutral.'

Shares soared 4.2% to $51.70.

BofA/Merrill analysts Paul Alexander and Lorraine Hutchinson said they changed their rating on the New Albany, Ohio-based retailer after seeing "a number of potential sources for earnings beats and catalysts that could improve sentiment and lead to higher earnings estimates," according to an investor note published today.

The analysts raised their 12-month price target to $60 from $54 to reflect increased earnings estimates and peer average multiple, they said. The analysts also upped their 2013 full year earnings estimate by 8 cents to $3.30 a share "to reflect greater confidence in the company's profit initiatives."

Also see: Abercrombie Plunges Amid Disappointing Earnings, Lowers Guidance

"The stock has taken a step back after a mixed 1Q, but we think the quarter's worst problems were temporary and we now see numerous areas where Abercrombie could beat expectations, particularly next year," the analysts wrote, adding that cost cutting initiatives and strategies "boosting average unit retail (AUR) are not yet fully baked into numbers."

The analysts also expect "acceleration" of comparable store sales.

Year-to date, the stock has underperformed its peers. The S&P 500 Retailing Index is up roughly 21% since Dec. 31 compared to Abercrombie which gained 8% in the same time period.

Also see: Abercrombie Forced to Apologize

According to Bloomberg, roughly half of 30 analysts surveyed rate the company an equivalent of a buy while 40% have a hold rating on the shares. (Bloomberg recommendation data doesn't include BofA/Merrill's.)

While Abercrombie trades a 15.2 times estimated earnings, its highest level in more than a year, according to a data compiled by Bloomberg, the BofA/Merrill analysts say there is still room for upside.

Wall Street "has not yet fully appreciated the potential of Abercrombie's new AUR Initiative," the note said.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,012.62 +30.03 0.18%
S&P 500 1,979.46 +0.55 0.03%
NASDAQ 4,456.8010 +11.8920 0.27%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs