Analyst Picks and Pans: Abercrombie & Fitch, Pentair, Array
Abercrombie & Fitch (ANF)
Citi Investment Research downgrades to sell from hold
Abercrombie & Fitch is likely to continue to see a weakening in its sales at stores open at least a year, Citi Investment Research analyst Kimberly Greenberger said on Sept. 4 as she downgraded the apparel retailer.
"We believe that Abercrombie & Fitch will continue to experience deteriorating same-store sales due to problems beyond pricing and newness as Abercrombie & Fitch's proactive promotional stance during back-to-school shopping season is not supporting improved sales productivity," Greenberger wrote in a client note.
The analyst anticipates that the sales misses will probably lead the New Albany, Ohio-based company to continue to lower its earnings per share forecasts. Greenberger also cut her share price target to $24 from $33.
KeyBanc maintains hold
Cost control and opportunities for growth will help Pentair weather the recession and boost revenue and earnings when markets improve, KeyBanc analyst Jeffrey D. Hammond said Sept. 4 as he raised his 2009 and 2010 profit estimates for the manufacturer of water treatment and storage systems.
Following a recent analysts' day presentation, Hammond said demand in the Minneapolis-based company's technical products business will likely remain challenged next year. But management's progress on cost containment will drive up earnings, he said. He increased his 2009 estimate to $1.43 per share from $1.40 per share and raised his 2010 estimate to $1.80 per share from $1.70 per share.
Near-term demand has not risen, but Pentair's vertical market focus and new product launches "could support a more robust growth profile in the next cycle," Hammond said in a note to investors.
Array Biopharma (ARRY)
Leerink Swann downgrades o market perform from outperform
Leerink Swann analyst Howard Liang said on Sept. 4 he views data from Phase II trial of the company's ARRY-162 for rheumatoid arthritis (RA) as poor. With data from the trial out of the way and without its potential to generate a large upside, Liang does not see another compound in Array's remaining pipeline to generate excitement in the near term.
Liang notes Array does have a broad product pipeline but in the new funding environment, its breadth may be difficult to sustain. He said Array's valuation is not compelling to him. The analyst cut his $6 price target to $2 by removing revenues from ARRY-162 from his model.