UPDATE1-JP Morgan ups Citi Trends, sees a healthy growth story

June 11 (Reuters) - JP Morgan upgraded Citi Trends Inc (CTRN.O) to "overweight" from "neutral," saying the value-priced apparel retailer is among the best square footage growth stories in retail.

Shares of the company rose as much as 11 percent early Thursday morning, before shedding some gains to trade up 9.83 percent at $23.92.

Analyst Evren Dogan Kopelman said the Savannah, Georgia-based company can potentially double its store-base, has an attractive store economic model, and boasts of a strong competitive positioning.

In May, Citi Trends posted quarterly results above estimates, helped by reduced freight costs and lower markdowns, and also raised its fiscal 2009 outlook.

The retailer, which is a smaller rival to TJX Companies Inc (TJX.N) and Ross Stores Inc (ROST.O), saw comparable sales up between 1 percent to 3 percent in the past 6 months, ahead of industry declines, the analyst said.

"Comps were positive in November & December, when even ROST and TJX comped flat to down," Kopelman added.

And even though its shares are down 21 percent over the past six trading days -- against a 1 percent fall of the S&P 500, the analyst believes the company's fundamentals and earnings power have not changed. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Jarshad Kakkrakandy)