UPDATE: Oppenheimer Initiates Coverage on Children's Place Retail Stores with Outperform Rating, $62 PT on Compelling Margin-Recovery Story

In a report published Thursday, Oppenheimer analyst Anna Andreeva initiated coverage on

with an Outperform rating and $62.00 price target. In the report, Oppenheimer noted, “With operating margins in the 6% range for the past three years, versus the goal of 10%-12% over time ($6.00 in EPS power), we believe PLCE fits the bill as one of the more compelling margin-recovery stories in our space. Consistent top-line performance is key to margin recovery/multiple expansion on the stock, and comps came in better than expected in 1Q13 (despite weather being a headwind), and with promotions tracking in line with last year thus far in 2Q13, we expect PLCE to comp at least flattish, with opportunity for comp inflection in 2H13. Granted, PLCE has been one of the better performing stocks in our universe (up 23% YTD, with all of the strength coming in the last two months) and at 17x and 15x our 2013 EPS estimates, valuation is now at the high end of historical ranges. However, with what appears to be conservative guidance for 2013 and a number of initiatives potentially playing out into 2H13, we think PLCE could be the sleeper stock of 2013. We also believe the new CFO is adding much-needed discipline to the organization, plus the stock is not well recommended on the sell side (<1/3 ratings are Buys). PLCE's shareholder base has become more ―sticky‖ recently, with short interest at multiyear lows (8% of the float, the lowest levels since 2004, compared to 15%-20% historically.” Children's Place Retail Stores closed on Wednesday at $54.07.