Oppenheimer Maintains Outperform On Ascena Retail, Reduces PT To $19

In a research report issued today, Oppenheimer analyst Anna Andreeva maintained an Outperform rating on Ascena Retail (NASDAQ:ASNA), and reduced his price target to $19 (from $22).

Andreeva commented, “ASNA lagged YTD, and coming into fiscal ’15, Justice (<40% total EBITDA) managing business for profitability with inventories down LSD and promotional cadence pulled back vs. LY, while synergies ahead of plan (raised by $5M–upside in transportation). Initial ’15 guide for down EPS appears conservative ($0.18 to our estimate from higher D&A and tax rate)–gross margin upside offset by expense deleverage (IT, store openings, higher headcount for omni-channel). While getting all five brands working simultaneously is difficult, new brands (30% sales) seeing profitability inflect, company specific initiatives driving margins at legacy brands maurices & dressbarn (42% sales), and tighter inventories at Justice should help stem margin pressure. Lowering EPS estimate and PT (from $22 to $19); expectations re-set as comparisons ease post 1Q15.,

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Anna Andreeva has a total average return of 3.8% and a 43.8% success rate. Andreeva has a -6.6% average return when recommending ASNA, and is ranked #1588 out of 3295 analysts.

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