Jefferies Raises Price Target on Ann Taylor to $25

While reiterating a “hold” on ladies apparel retailer Ann Taylor (NYSE: ANN) today, Jefferies also boosted its price target on the stock to $25 from $24.

“We were pleased to see gross margin expansion despite several industry headwinds and view management's reiteration of full-year guidance as a positive in this environment. However, we think the good news is priced in at these levels and see risk/reward as balanced,” Jefferies analyst Randal Konik said in a note.

In an upside scenario, Jefferies says Ann Taylor could earn $2.20 a share in fiscal 2013 and at 16x that number arrive at $35 a share. On the downside, the company's top line could falter and the economy could soften. That could lead to $1.90 a share in EPS and at 10x that level, result in a share price of $19, the note said.

“ANN is on track to expand its Ann Taylor new concept stores (>50% productivity) and accelerating LOFT outlets as planned, which should boost long-term sales and margins,” Konik said.