Susquehanna Downgrades Tween Brands (TWB) to Neutral; Risk/Reward Profile Minimal After Dress Barn (DBRN) Offer

June 26, 2009 9:27 AM EDT

Susquehanna downgrades Tween Brands (NYSE: TWB) from Positive to Neutral

Susquehanna analyst says, "With the surprise announcement that TWB will merge into Dress Barn, Inc.'s (Nasdaq: DBRN) operations in a stock-for-stock transaction, TWB posted a significant 28% appreciation in share price to $6.63. From DBRN's point of view, the transaction provides significant economies of scale and a non-cannibalistic concept with substantial operating profit potential, creating meaningful long-term value. As it relates to TWB, we see the merger announcement as a safe way of protecting the brand and its employees, if in fact the economic environment remains challenging for the longer term. In terms of our investment thesis on TWB, we had rated the shares Positive based on our long-term view that the convergence of the Justice brand created significant earnings power, which would propel the shares higher at the point in which margin recovery was visible. In light of the announcement, although there is potential for an outside bidder to drive upside from current levels, we see the risk/reward profile as minimal, and are therefore downgrading TWB to Neutral from Positive.

To see more analyst ratings on TWB Click Here.

Tween Brands, Inc. (Tween Brands) is the operator of two specialty retailing brands, Limited Too and Justice.

Related Categories

Downgrades

Stocks Mentioned

Related Entities

• Susquehanna International Group of Companies

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?