Analysts' Upgrades/Downgrades: J. Crew

Change in Ratings

American Eagle Outfitters(AEO) coverage initiated at Goldman with a Sell rating. See significant risk stemming from increased fashion element intended to attract older teen demographic. See strategy as a distraction that could hurt healthy guys and young girls businesses. Note this month's departure of President Susan McGalla. Price target at $12.

Ann Taylor(ANN) coverage initiated at Goldman Sachs with a Sell rating, based on potential negative impact of plans to modernize apparel lines. See departure from classic heritage as an aggressive plan that could move too fast. Note cautious view on apparel sector and overall negative macro outlook. Price target at $21.

Aeropostale(ARO) coverage initiated at Goldman with a Buy rating and $36 price target. Believe consensus estimate do not reflect near-term opportunities, particularly in core younger teen demographic. Note that value model has historically driven solid results in the current environment, even as peers struggle.

Chico's(CHS) FAS coverage initiated at Goldman Sachs with a Sell rating based on major concerns over potential for profit recovery. See ongoing sales pressure on mature women's retailers, driven by environmental headwinds, changing customer tastes, and overcapacity. Price target at $5.

Dr. Pepper Snapple(DPS) upgraded at UBS to Buy from Neutral. 2008 EPS estimates lowered to $1.87 from $1.98. Price target lowered to $24 from $28.

Gap(GPS) coverage initiated with a Neutral rating at Goldman. Note potential risk from fashion shift at Old Navy, as well as weak trends at Banana Republic. See addition of CEO Glenn Murphy as a potential positive, based on initiatives to capture low-hanging profit opportunities. Target at $17.

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