CSFB Upgrades Children's Place to 'Outperform'

Analyst Richard Baum cites evidence of a credible turnaround over the past two quarters for the retailer

CS First Boston upgraded Children's Place (PLCE ) to outperform from neutral.

Analyst Richard Baum says his upgrade is based on evidence of a credible turnaround over the past two quarters; a view for improving average margins and returns; and a significantly enhanced management team. He says recent quarterly results demonstrate that strategies put into place a over year ago can drive significant transaction count increases and margin improvement.

Baum notes better merchandise at attractive price points has become a traffic driver rather than fire sale promotions. He says operating margin is still well below peak (14%); he sees still ample room for expansion. Baum sees 79 cents fiscal 2004 (Jan.) earnings per share, and $1.05 in fiscal 2005. He set a $32 target.

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