Merrill Lynch upgraded Oakley (OO ), BJ's Wholesale Club, and seven other retailers to buy from neutral.
Analyst Mark Friedman says he thinks most retailers could outperform the market through March. He believes there could be possible upside earnings surprises, a seasonally strong period just ahead, accelerating sales, reasonable valuations, and a continued fashion upturn. In particular, Friedman says his upgrade of Oakley reflects increased potential for a 2004 recovery. He thinks sales of sunglasses will rebound on pent-up demand after soft sales in recent quarters.
Also, Friedman thinks a street marketing campaign, driven by young brand representatives, is also a plus for retailers. He upped the 56 cents 2003 earnings per share estimate to 57 cents, upped the 65 cents 2004 estimate to 75 cents. He has a $14 target.