UPDATE: Nomura Initiates Coverage on Ann with Neutral Rating, $36 PT on Fundamental Strength, Challenging Mall Environment

In a report published Monday, Nomura analyst Simeon Siegel initiated coverage on

with a Neutral rating and $36.00 price target. In the report, Nomura noted, “We expect the fundamental strength at ANN INC. (ANN) to continue but believe the shares may be range-bound in the near term in a challenging mall environment absent multiple expansion. As such, we are launching coverage on ANN with a Neutral rating but would look to become constructive on market pullbacks. We believe the drivers are in place to push margins back toward the 10%+ range in the long term through 1) increased penetration of the margin-accretive factory/outlet and 2) further growth in the DTC segment. We are projecting FY13/FY14 EPS of $2.26/$2.58, compared with the Street at $2.22/$2.56. Our $36 target price is based on 13-14x our FY14 estimate versus the softlines coverage universe average multiple of 14x and the stock's historical 10 year average of 15.5x.” Ann closed on Friday at $35.29.