Goldman Sachs Sees 11 Retail LBO Deals (PLCE) (OMX) (ANF) (AEO)

The lift seen today in American Eagle Outfitters, Inc. (NYSE: AEO) on takeover speculation could just be the start of the rumors in the retail sector, after Goldman Sachs said they see a number of LBO deals in the space.

Goldman estimates that around $9 billion on the total $432 billion in leveraged buyout "dry powder" could be targeted specifically toward US retail deal. They note that this amount is about 8% of the total aggregate enterprise value of a universe of more than 120 public companies, suggesting around 11 deals based on historical average deal size.

Stocks that Goldman Sachs is assigning an M&A rank of "2", suggesting a 15%-30% probability of a transaction include:

• The Children's Place Retail Stores, Inc. (NASDAQ: PLCE) (Buy): Implied LBO Valuation = $69; Price Target = $57
  
  
• OfficeMax Inc. (NYSE: OMX) (Buy): Implied LBO Valuation = $20; Price Target = $17
  
  
• Abercrombie & Fitch Co. (NYSE: ANF) (CL-Buy): Implied LBO Valuation = $83; Price Target = $72 (up from $70)
  
  
• American Eagle Outfitters, Inc. (NYSE: AEO) (Buy): Implied LBO Valuation = $22; Price Target = $19 (up from $18)
  
  
• Aeropostale, Inc. (NYSE: ARO) (Sell): Implied LBO Valuation = $36; Price Target = $25 (up from $23)
  
  
• RadioShack Corp. (NYSE: RSH) (Buy): Implied LBO Valuation = $21; Price Target = $18
  
  
• AnnTaylor Stores Corp. (NYSE: ANN) (Neutral): Implied LBO Valuation = $31; Price Target = $27 (up from $26)
  
  
• Dollar Tree, Inc. (Nasdaq: DLTR) (Neutral): Implied LBO Valuation = $64; Price Target = $61
  
  
• Ross Stores Inc. (Nasdaq: ROST) (Neutral): Implied LBO Valuation = $82; Price Target = $69 (up from $67)
  
  
• Gap Inc. (NYSE: GPS) (Neutral): Implied LBO Valuation = $26; Price Target = $22 (up from $21)
  
  
• Safeway Inc. (NYSE: SWY) (Buy): Implied LBO Valuation = $25; Price Target = $25

The firm lowered their M&A ranking on Lululemon Athletica Inc. (Nasdaq: LULU) to 3 from 2.

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