Abercrombie (ANF) Makes an Attractive LBO Target, Could Draw $70/Share
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Abercrombie & Fitch (NYSE: ANF) shares have been on fire over the last month amid speculation the company might be a takeover target for private-equity firms (not to mention strong quarterly numbers). From a near-term low just above $40 in early February, shares have ripped over 30 percent higher to about $52. Shares are also up 13.8 percent in March alone, above and beyond the the 7.8 percent gain in Bloomberg Industries’ 11-stock Specialty Apparel Teen, Tween & Young Adult Clothing Stores Index in the same period.
According to Bloomberg, shares still go for about 4.4 times EBITDA estimates through 2015, less than any of its closest competitors.
With its quarterly report, CEO Michael Jefferies said Abercrombie could see a rebound in international sales which would help the retailer double its free cash flow to about $500 million within three years. Options have also seen some action, with call volume outpacing puts by about 20 percent last week, the most in 19 months. Bloomberg noted put volume outpaced calls by 43 percent during its February lows.
Analyst firm Cowen sees Abercrombie getting $70 per share in the takeover bid, a 34 percent premium to the recent trading range. One Morningstar analyst said Abercrombie has all the characteristics of a solid LBO: strong free cash generation, relatively debt-free, and a business that can be monetized.
And no: models will not be included in the deal.
Shares are up 0.9 percent ahead of the bell.
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According to Bloomberg, shares still go for about 4.4 times EBITDA estimates through 2015, less than any of its closest competitors.
With its quarterly report, CEO Michael Jefferies said Abercrombie could see a rebound in international sales which would help the retailer double its free cash flow to about $500 million within three years. Options have also seen some action, with call volume outpacing puts by about 20 percent last week, the most in 19 months. Bloomberg noted put volume outpaced calls by 43 percent during its February lows.
Analyst firm Cowen sees Abercrombie getting $70 per share in the takeover bid, a 34 percent premium to the recent trading range. One Morningstar analyst said Abercrombie has all the characteristics of a solid LBO: strong free cash generation, relatively debt-free, and a business that can be monetized.
And no: models will not be included in the deal.
Shares are up 0.9 percent ahead of the bell.
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