UPDATE: Nomura Downgrades Ann to Neutral

Nomura reduced its rating on Ann

from Buy to Neutral but raised its price target from $35 to $38. Nomura noted, "For a long time, the market has failed to appropriately consider the earnings upside if Loft and Ann Taylor Stores (ATS) were to get it right at the same time. With 2Q performance demonstrating both can work, we believe the idea that the divisions can work at the same time is now consensus. The new pricing strategy at ATS of investing in more products at opening (lower) price points is working (as 2Q showed to a small degree), however, September product resonated as well as it could have. We are raising our TP from $35 to $38 to reflect both divisions getting on the right path longer term. Our TP represents 14x and 6.0x our F13E EPS of $2.69 and EBITDA of $300MM, respectively." Ann closed at $37.38 on Thursday.