Ascena Retail (ASNA) Stock Upgraded by RBC Capital Markets

NEW YORK (TheStreet) -- RBC Capital Markets upgraded Ascena Retail (ASNA) to "outperform" from "sector perform" on Friday.

The analyst firm set a price target of $20 for the retailer.

RBC analyst Brian Tunick believes that Ascena's estimates are "poised to move significantly higher" ahead of the company's "transformational ANN (ANN) deal." The analyst also noted that margins for the company's Justive and Lane Bryant brands are "currently derisked and any recovery in those brands' margins just upside from here."

Tunick wrote, "We see a favorable risk/reward on the shares ($14 downside/$20 upside) given that: 1) the ANN deal will be immediately accretive; 2) the $150MM synergies excludes ANN's $85MM margin efforts; 3) the expectation for double-digit comp declines at Justice has been priced in, with brand margins derisked at 2% vs. peak 13% levels; 4) the Lane Bryant turnaround appears to be gaining traction while maurices and Catherines have momentum."

Separately, TheStreet Ratings team rates ASCENA RETAIL GROUP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ASCENA RETAIL GROUP INC (ASNA) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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