Wells Fargo Upgrades Vera Bradley (VRA) to Outperform; Not A Falling Knife

Wells Fargo upgraded Vera Bradley (NASDAQ: VRA) from Market Perform to Outperform, price target range of $39-$41.

Wells analyst says, "When we downgraded the stock on May 12th, it was due to our view that the valuation looked full at $50.37; today, VRA's growth opportunities are essentially unchanged and at $31.95, we think that a tougher macro environment is priced in and there is 22-27% upside potential to our valuation range of $39-41. We feel comfortable with our estimates (which assume some slowdown in 2H vs. 1H) and see potential upside in 2012 from a likely Dillards rollout and lower cotton prices. VRA's valuation has contracted significantly relative to other growth names over several concerns that could be resolved over the next several quarters. Short interest has risen dramatically to 23% of the float. We believe VRA has a proven brand (29-yr history), significant growth opportunities (retail, wholesale and international) and strong operating margins (20.5% in 2010; only Coach (NYSE: COH), Lululemon (Nasdaq: LULU) and Tiffany (NYSE: TIF) have higher margins)."

For more ratings news on Vera Bradley click here and for the rating history of Vera Bradley click here.

Shares of Vera Bradley closed at $31.95 yesterday.

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