Citi Upgrades Aeropostale (ARO) to Hold

October 10, 2008 8:13 AM EDT

Citi upgrades Aeropostale Inc (NYSE: ARO) from Sell to Hold. Price target $27.

Citi analyst says, "We are raising our rating to Hold from Sell on ARO given ARO’s decline below our target price of $27 ($27 based on our unchanged view of a fair valuation ~12x our 2009 EPS of $2.25), strong results (on a relative basis) on September Retail Sales as ARO achieved the best comp in softlines at +5%, & likely continued market share gains from other teen apparel retailers...We remain on sidelines as we believe mgmt may have bought inventory for a higher comp given strong trends in 1Q & 2Q (+10 & +11% comps respectively). ARO’s inventory position +9% psf end of 2Q08 vs. softlines avg of ~(9)% & if ARO had purchased inventories assuming a continuation of +DD comps, gross margins could be at risk."

Aeropostale, Inc. is a mall-based specialty retailer of casual apparel and accessories.

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