Piper Jaffray Reiterates Buy on Abercrombie & Fitch (ANF)

June 30, 2008 8:40 AM EDT

Piper Jaffray reiterates their Buy rating on Abercrombie & Fitch (NYSE: ANF) and maintains their $87 price target, after traveling with the CFO.

The firm said, "Among teen/youth retailers under coverage, we favor mid-cap ANF for long-term growth potential. While U.S. sales remain highly suspect to traffic volatility, we think the company's financial model is built with inherent flexibility to sustain double digit net income growth through various economic and fashion cycles. Layer atop the prospects forming in international markets and we think ANF offers a compelling core holding with further margin expansion potential from already industry high rates."

Piper also highlighted that ANF management believes that over the next 10 years, international revenues could increase from 12% to over 50% of consolidated revenues. Due to the tough macro environment ANF’s overall sales growth related to U.S. non-tourist stores is moderating. However, Piper believes “ANF fundamentals have fared remarkably well in the face of traffic volatility, increases in product costs, and a higher than average level of pre-opening expenses related to U.S. and international store development.� Also, the company is on track to grow its net income double digits this year and Piper still expects profit expansion near double digit rates this year.

Abercrombie & Fitch Co. operates as a retailer of casual apparel for men, women, and children in the United States, United Kingdom, and Canada.

Related Categories

Analyst Comments

Stocks Mentioned

Related Entities

• Piper Jaffray
• Fitch Ratings

Add Your Comment

Name

Subject

Body

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