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UPDATE 1-JP Morgan raises Urban Outfitters, Coach; cuts 3 others
March 26, 2010 / 3:54 PM / 7 years ago

UPDATE 1-JP Morgan raises Urban Outfitters, Coach; cuts 3 others

March 26 (Reuters) - J.P. Morgan Securities raised shares of Urban Outfitters (URBN.O) and Coach Inc (COH.N) to “overweight,” citing growth opportunities at the companies, sending Urban shares up 5 percent to their highest ever.

The brokerage also upped Ann Taylor Stores Corp ANN.N a notch to “neutral,” expecting continued sales improvement as the apparel company sees benefits from the turnaround efforts it took up last year.

Ann Taylor shares touched $21.07, their highest in a year, while Coach shares rose to $40.60, their highest in more than two years.

Urban Outfitters, which sells apparel and home decor, and Coach, known for its handbags other accessories, will benefit from better margins and square footage growth, JP Morgan said.

“Urban has many of the attributes that growth investors in our space look for: differentiated portfolio of brands, double-digit square footage growth, and opportunity for operating margins to expand,” JP Morgan analysts said in a note to clients.

They also said comparable quarter-to-date trends at Coach have accelerated closer to being up 4 to 5 percent, and the company’s full-price stores could post their first positive comparable sales since the first quarter of 2008.

However, the analysts downgraded shares of Buckle Inc (BKE.N) and Coldwater Creek CWTR.O. While the Buckle stock is likely to underperform that of peers, turnaround efforts at Coldwater is taking longer than expected, they said.

Coldwater has lagged behind rivals Chico’s FAS Inc (CHS.N) and Anntaylor Stores Corp ANN.N as they try to revamp their businesses, with some analysts pegging the problem on average-looking merchandise.

The brokerage also downgraded off-price retailer Ross Stores Inc (ROST.O) to “neutral” mainly on valuation.

For related alerts, double click [ID:nWNAB4106] (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Gopakumar Warrier)

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