UPDATE: Nomura Upgrades Abercrombie & Fitch to Buy Post Strong Quarter, Guidance

Nomura raised its rating on Abercrombie & Fitch

from Neutral to Buy and raised its rice target from $34 to $51. Nomura said, "10 Reasons to Own ANF: (1) All int'l markets improved with the exception of the UK, (2) US comps +2% vs down 5% in 2Q, and US comparisons get 10 ppt easier in 4Q12, (3) Inventory down 10% (ex in-transit) and management plans to manage inventory below sales growth for the foreseeable future, (4) AUR down only slightly with int'l Hollisters up, (5) AUC benefit in 4Q greater than 3Q (and AUC still down through 1H13), (6) Beginning to flow more newness and increase breadth of assortment, (7) A new focus on accessories, a very underpenetrated category at ANF, (8) A continued focus on expenses including a detailed review that it will share on 4Q call, (9) Strong initial customer traction from new loyalty program, (10) Strong FCF (F13E of ~$400MM), a yield of 14% (even w/stock up today)." Abercrombie & Fitch closed at $41.92 on Wednesday.