Analysts upgrade Abercrombie & Fitch; shares rise

posted: 92 DAYS 21 HOURS AGO

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NEW YORK -Two analysts on Monday said international growth will help bolster Abercrombie & Fitch's long-term growth and upgraded the teen apparel retailer.

Shares rose $2.60, or 7.4 percent, to $37.61 during midday trading. The stock has traded between $13.66 and $37.80 over the past year.

Abercrombie & Fitch has suffered slumping sales as it kept its prices relatively high and kept investing in international growth while the economy faltered and consumers cut back.

However, it has begun to offer lower prices in recent months and analysts said that the lower-price value message, plus international growth, could help results improve.

Goldman Sachs analyst Michelle Tan said in a note to investors that accelerating international store openings have the potential to nearly double earnings per share growth, and there are opportunities for more international openings in 2011.

Also, the company's "more vocal value message" is starting to help traffic and more tourists are coming to the U.S. Tourists boost sales at U.S. flagship stores, Tan said.

She upgraded Abercrombie to the "Conviction Buy List" from "Neutral."

Meanwhile, Credit Suisse analyst Paul Lejuez also upgraded the company based on international strength. He said new space productivity came in higher than expected in October, driven by international Hollister stores, its Milan flagship opening and e-commerce.

"This gives us greater confidence that the company can beat earnings expectations in third quarter, fourth quarter and 2010," he wrote in a client note.

He upgraded the stock to "Outperform" from "Neutral."

The company reports third-quarter results Friday.

2009-11-09 11:33:56