Retail Upgrades and Downgrades: Gap

Retailers receive a boost from analysts with several upgrades in the sector, including Gap, Best Buy and UnderArmour.
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NEW YORK (

TheStreet

) -- Retailers received some good news on Monday, as several retail companies were upgraded by analysts.

As

Gap's

(GPS) - Get Report

sales continue to improve, Piper Jaffray upped its rating on the stock to overweight from neutral and boosted its price target to $30 from $22.

The specialty retailer said last week that its March sales jumped 11%, its best monthly performance in three years, with positive numbers across all its chains. By division, Gap's namesake stores saw a 11% increase, Banana Republic climbed 10% and Old Navy grew 13%.

Analyst Jeffrey Klinefelter said Gap is poised to benefit from the turnaround in the apparel sector. "After three years of apparel industry declines, our research points to a low single-digit gain during 2010 and for large-scale retailers like Gap to benefit at least at average rates," he wrote. "An improved apparel spending cycle coupled with a potential non-denim bottoms trend could make Gap a preferred brand/destination once again."

Susquehanna also raised its price target for Gap to $30 from $26.

Under Armour

(UA) - Get Report

was also upgraded by Piper Jaffray to overweight from neutral, as it becomes more popular with the teen demographic.

According to a Piper Jaffray survey, Under Armour is the second most popular brand among teens.

Klinefelter also lifted his price target to $41 from $26.

Abercrombie & Fitch

(ANF) - Get Report

saw its 12-month price target hiked by Jeffries & Co. on Monday to $75 from $50. Analyst Randal Konik said a meeting with management in London showed that Abercrombie's U.S. business is on a path to recovery, while its international segment will drive growth and is more powerful than estimated.

Konik said international business could be near 25% of Abercrombie's sales and 50% of profit in 2011.

Dillard's

(DDS) - Get Report

credit rating, meanwhile, was increased to stable by Fitch Ratings, which cited the department store improved credit and liquidity positions.

Last week, Dillard's posted a 9% spike in March same-store sales.

Best Buy

(BBY) - Get Report

was upgraded on Monday on the possibility that it may acquire rival

RadioShack

(RSH)

.

FBR Capital Markets upped the electronics retailer to market perform from underperform. Analyst Stephen Chick said that an acquisition of this nature would be beneficial to Best Buy, comparing it to the company's 50% ownership of U.K.-based Carphone Warehouse.

While the deal would be a benefit to earnings, there is still risk to merging the two companies, Chick wrote in a note. "We would like to let the dust settle here in order to better assess the risk/reward of Best Buy."

99 Cents Only Stores

(NDN)

was upgraded to buy from hold by wall Street Strategies in light of the stock's recent pull back.

The discounter pre-announced last week that sales for the fourth quarter grew 3.1% to $339.3 million, better than analysts' estimates.

-- Reported by Jeanine Poggi in New York.

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