Jefferies Raises Price Target on rue21 (RUE) Following Solid Quarter and Raised Outlook

May 27, 2011 8:26 AM EDT
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Price: $41.99 --0%

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Jefferies is maintaining its Hold rating on shares of rue21, inc. (NASDAQ: RUE), but is raising its price target from $31 to $33 following a very good start to the year.

The company released its Q1 results with EPS of $0.38, SSS up 5%, and gross margin increasing 100 bps. All of these numbers were well above the firms estimates of $0.29, 2.5%, and 10 bps.

Due to the strong market trends, RUE issued its Q2 guidance with an EPS range of $0.30-$0.32. It also raised its 2012 EPS guidance from $1.40-$1.44 to $1.50-$1.54. The company continues to experience very solid performances from its new stores and has already secured 110 new store locations for this year.

"RUE believes it is well positioned for several reasons, its domestic importer base allowed RUE to hold off longer on buying B2S and Holiday merchandise and avoid negotiations when cotton prices were at peak levels; RUE has seen little resistance to higher prices thus far; and the accessories category is ~26% of sales and the fastest growing category with no cotton exposure," reports Jefferies.

The firm is increasing its Q2 and 2012 EPS estimates from $0.29 and $1.45 to $0.31 and $1.55.

For more ratings news on rue21, inc. click here and for the rating history of rue21, inc. click here.

Shares of rue21, inc. closed at $28.60 yesterday.

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