FBR Capital Markets Believes Shareholder Activism is Picking Up at Abercrombie & Fitch

In a report published Wednesday, FBR Capital Markets analyst Susan Anderson reiterated an Outperform rating and $43.00 price target on

. In the report, FBR Capital Markets noted, “Engaged Capital sent a letter to the ANF board highlighting the upcoming contract expiration (February 1, 2014) of Michael Jeffries, ANF CEO, as a catalyst for a change in management, claiming that the company's underperformance is a direct result of a failure of leadership. The letter highlighted the expiration as an opportunity for the board to set a new direction for the company. The pressure on the company may not only apply to making changes. Engaged cited our research and mentioned in its letter that a sale of ANF to a private equity buyer may represent the best option for shareholders but called out that management represents a major roadblock. We believe that it is a significant possibility that activism activity will focus on clearing this roadblock and then pursue a sale. Engaged will likely continue to pressure the board for changes ahead of Jeffries' contract expiration and may lobby to elect new board members at the next annual meeting. We believe this letter may only be the beginning of shareholder activism, which should continue to be a catalyst for the stock.” Abercrombie & Fitch closed on Tuesday at $35.99.