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Ahead Of Bell: Chico's Taken Off Top Picks List

The Associated Press

NEW YORK (AP) — An analyst removed Chico's FAS Inc. from her Top Picks list Tuesday partly on improved margins and inventory control efforts, but remained upbeat on the clothing retailer's future prospects.

Adrienne Tennant of FBR Capital Markets said the Fort Myers, Fla., company's stock price has been rising rapidly, and "now needs earnings to grow into the valuation."

The stock, which was added to the Top Picks list on April 17, has gained 40 percent since that time.

"Given the recent strength of the stock relative to its peer group, as well as the near-term risk/reward, we no longer rate shares as a Top Pick," Tennant wrote in a note to clients.

But the analyst kept Chico's "Outperform" rating and $12 price target, saying she continues "to believe the company is making great strides with the overall turnaround strategy."

Late last month, Chico's said its fiscal first-quarter profit rose 14 percent as it lowered expenses and saw increased sales at its White House Black Market stores. In January, the company said it would eliminate 180 positions and may close up to 25 stores to cope with the economy's toll on retailers.

In premarket trading, shares rose 19 cents to $10.50.