Ahead Of The Bell: Gymboree Upgraded, Shares Rise

NEW YORK (AP) — Market share gains, improved merchandise and top-notch management were among the reasons an analyst gave for upgrading shares of children's clothing retailer Gymboree Corp. on Tuesday. Shares rose in premarket trading.

Friedman, Billings, Ramsey analyst Adrienne Tennant upgraded shares of Gymboree to "Outperform" from "Market Perform."

Tennant said the company's Crazy 9 clothing stores division has improved greatly since last year.

"We applaud management for rapidly addressing issues and having come a long way in a short time," Tennant wrote in a client note.

Meanwhile, Gymboree is gaining market share amid waning competition. Rival Talbots Kids, for example, has shuttered its operations.

"We believe Gymboree is now one of the 'go to' brands for parents," Tennant wrote.

Shares of Gymboree have soared 92 percent so far this year, and while Tennant said that investors may shy away from a stock that has risen significantly, there's still room for it to run higher.

Tennant's price target is now $59 from $46, which means she thinks the shares have room to rise 28 percent from Monday's close of $50.11.

Shares rose $1.39, or 2.8 percent, to $51.50 in premarket trading.