NEW YORK (TheStreet) -- Analysts are issuing mixed reviews of the retail sector, with several companies being upgraded and downgraded on Friday.

J.P. Morgan, for one, cut its rating on Ross Stores ( ROST), Buckle ( BKE) and Coldwater Creek ( CWTR), while at the same time upped its rating on Coach ( COH), Urban Outfitters URBN and AnnTaylor Stores ( ANN).

Best Buy's ( BBY) rating was revised downward after its earnings report yesterday, while Fred's ( FRED) was lifted on its better-than-expected results.

Read on to see all the retailers getting raised and lowered by analysts Friday...

Ross Stores

Ross Stores ( ROST) was downgraded to neutral from overweight by J.P. Morgan, as its stock price has little upside.

Shares of the off-pricer have been outpacing its peer group, up 27% for the year-to-date period compared with 16% for its rivals.

J.P. Morgan upgraded Ross to overweight back in April 2008. Since then the company lived up to expectations, skillfully managing through the recession. But now, as the economy recovers, analyst Brian Tunick does not think Ross will continue to outperform its competition.

Tunick says the good news is already baked into the stock. Shares of Ross are slipping 0.9% to $53.24 in afternoon trading.


Like Ross Stores, Buckle's ( BKE) stock has also been outperforming the sector, with shares up 30% for the year-to-date period, compared with 13% for its group.

It, too, was a shining star of the recession, managing to continue to sell its premium denim even as shoppers traded down. Buckle is now trading in-line with other "full" margin retailers at 12x and has become "unattractive" at current levels, Tunick wrote in a note.

Still, Tunick thinks this valuation is fair given that margins are currently at historic highs. But other "full margin" stocks like TJX ( TJX) and Aeropostale ( ARO) have more opportunity.

Coldwater Creek

Women's apparel retailer Coldwater Creek ( CWTR) has seen its shares soar 60% for the year-to-date period. Its peer group is up 20%.

J.P. Morgan downgraded the company to neutral on fear that Coldwater's turnaround is taking longer than expected.

While gross margins rose in the fourth quarter for the first time in over two years, inventory levels, which are up 20%, will remain a hurdle for Coldwater over the next several quarters.

Still, missy retailers are seeing robust same-store sales and Tunick believes traffic trends will continue to improve.

Shares of Coldwater are falling 2.9% to $7 in afternoon trading.


Coach ( COH) is underperforming the group, with shares up just 6% compared with 20% for its market. "We view Coach as a margin recovery story that, when compared to our specialty universe, has the most 'ways to win' in 2010," Tunick wrote in a note. As a result he lifted Coach to overweight from neutral.

Coach still has plenty of "ways to win," including square footage growth, gross margin expansion, positive same-store sales and an international story, Tunick wrote.

Tunick said the Street's estimates are too low and believes Coach has the potential for $3.50 earnings power over the next three years.

Shares of Coach are gaining 3.5% to $40.05 in afternoon trading.

Urban Outfitters

Urban Outfitters is a must own for investors looking for a differentiated portfolio of brands, double-digit square-foot growth both domestically and internationally, and an opportunity for margins to expand from 17.5% to 20%-plus in the next few years, Tunick wrote.

J.P. Morgan upped the specialty retailer to overweight from neutral. Shares of Urban Outfitters are up just 4% for the year-to-date period, compared with 20% for its peer group, yet fundamentals have only gotten better, Tunick wrote.

The biggest concern has been about the Urban Outfitters division, which has lagged Anthropologie for the past three quarters. But same-store sales at the division have been accelerating due to improved product and comparisons will ease for the rest of the year, Tunick wrote.

Shares of Urban Outfitters are rising 2.9% to $37.91.

AnnTaylor Stores

AnnTaylor is a turnaround play that should continue to see sales improvement, leading Tunick to raise his rating on the stock to neutral.

Tunick expects sales to continue to improve for the foreseeable future. The company is also in the process of shuttering stores (about 40% of AnnTaylor's store base). That, coupled with an improved balance sheet, will help boost shares, he said.

J.P. Morgan has had an underweight rating on AnnTaylor for several years as the missy sector declined and on fears that AnnTaylor and Loft stores would cannibalize each other. "However, since then, the company has taken dramatic defensive steps including store rationalization and overhauling its expense structure," Tunick wrote. "In addition, the missy space appears to have hit an inflection, as this core customer has scaled back her wardrobe for nearly four years."

AnnTaylor is jumping 3.6% to $20.97 in afternoon trading.

Best Buy

Best Buy ( BBY) was downgraded by FBR Capital following its fourth-quarter earnings report yesterday.

During the quarter, Best Buy earned $779 million, or $1.86 a share, compared with $570 million, or $1.38 in the year-ago period. Analysts were calling for earnings of $1.79 a share for the electronics retailer.

Best Buy's revenue jumped 12% to $16.55 billion from $14.72 billion, while its same-store sales rose 7%. Best Buy received a boost from sales of notebook computers, flat-panel televisions and mobile phones.

Best Buy's U.S. sales grew 11% to $12.6 billion, while international sales shot up 15% to $4 billion.

Analyst Stephen Chick said these results could have been the peak for Best Buy and that same-store sales will slow in the first quarter.

"From here, we think that Best Buy will face an inevitable deceleration in its business, as the company cycles the significant market share gains it garnered from the demise of its No. 1 former competitor, Circuit City," he said.


Fred's ( FRED) is advancing 6.3% to $12.27 after it was upgraded by BB&T Capital Markets to buy from hold.

Analyst Andrew Wolf said Fred's will continue to boost revenue as it remodels its stores. "In the six years that we have covered Fred's, the dollar-store operator has struggled to establish fundamental momentum," he wrote. "This is set to turn, in our view. We believe that CEO Bruce Efird's initiatives to improve operations, marketing and the consumer franchise appear to have reached a tipping point."

Fred's plans to revamp more than 400 of its stores over the next two years.

On Thursday, the discounter reported fourth-quarter profit more than doubled and released 2010 outlook in-line with analysts' expectations for Fred's.

During the quarter, Fred's profit reached to $5.7 million, or 15 cents per share, compared with $2.3 million, or 6 cents, a year earlier. Revenue rose 1% to $473.1 million from $469.4 million.

-- Reported by Jeanine Poggi in New York.

Follow on Twitter and become a fan on Facebook.

More from Stocks

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

3 Great Stock Market Sectors Millennials Should Invest In

3 Great Stock Market Sectors Millennials Should Invest In

Why Millennials Are Ditching Stocks for ETFs

Why Millennials Are Ditching Stocks for ETFs

Trump's 'Space Force' Could Launch a $1 Trillion Industry, Morgan Stanley Says

Trump's 'Space Force' Could Launch a $1 Trillion Industry, Morgan Stanley Says

Abiomed Stock Should Rise Some 12% From Here, Piper Jaffray Analyst Says

Abiomed Stock Should Rise Some 12% From Here, Piper Jaffray Analyst Says