UPDATE: FBR Capital Markets Initiates Coverage on Abercrombie & Fitch Co. with Outperform Rating, $43 PT on Positive Outlook

In a report published Wednesday, FBR Capital Markets analyst Susan Anderson initiated coverage on

with an Outperform rating and $43.00 price target. In the report, FBR Capital Markets noted, “We are initiating coverage of Abercrombie & Fitch Co. (ANF) with an Outperform rating and a 12-month price target of $43 per share. While ANF arguably has the best brand among the teen retailers, it has still suffered from the weakness in the space, and we believe a longer-term fundamental fix is needed to put ANF back on track. However, at current levels (11x consensus 2014 EPS versus ANF's 10-year average of 14x and AEO's of 12x), strong FCF and the floor on the stock created by the takeout potential make the shares attractive, with any turn in the business a free option. We also like ANF's strong brand recognition, international exposure, e-commerce growth, and cost-cutting initiatives. While 2H13 and the holiday season could be weaker than expected, we believe relatively conservative assumptions are already priced in and would be buyers, particularly on weakness in this environment.” Abercrombie & Fitch Co. closed on Tuesday at $35.91.