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Abercrombie & Fitch Splits Street; Stock Soars

Abercrombie & Fitch is both upgraded and downgraded on Monday, as analysts can't agree on its promotional selling strategy. The market is less confused, sending shares in the company soaring.

Analysts just can't seem to agree on

Abercrombie & Fitch

(ANF) - Get Abercrombie & Fitch Co. Class A Report


The teen retailer was both upgraded and downgraded on Monday, as analysts view the company's deeper promotions as both a plus and minus.

Investors, however, believed the upgrade, sending share climbing 7% to $32.29 in morning trading.

Friedman, Billings, Ramsey analyst Adrienne Tennant upgraded the company to outperform from market perform citing improved merchandise, lower prices and stronger customer traffic.

"Since mid-May, when the company put 'clearance' signs in its three core brands, our checks have shown increased traffic," Tennant wrote in a note on Monday.

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Tennant raised her May same-store sales estimate to a 20% drop from previous forecast of a 28% decline.

Brean Murray Carret analyst Eric Beder, however, cut his rating to hold from buy, expecting May same-store sales to be weak due to "anemic" full-price selling.

Beder said in a note on Monday that Abercrombie & Fitch is not making a case for a near-term turnaround as estimates and operations have not improved, and May comparable sales faces its toughest comparison. The company has not provided guidance for the rest of the year or even the second quarter.

"Frankly, with visibility almost non-existent, we cannot honestly say we have tremendous confidence in our projections," Beder wrote.

But he did say Abercrombie is an appealing long-term investment, since it has the potential to recapture full-price selling once the economy improves.

Last month, Abercrombie & Fitch reported a

larger-than-expected loss

and said it would strategically review its contemporary Ruehl concept.

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