UPDATE: FBR Capital Markets Initiates Coverage on Aeropostale, Awaiting Positive Signs of Turnaround

In a report published Wednesday, FBR Capital Markets analyst Susan Anderson initiated coverage on Aeropostale (NYSE: ARO) with a Market Perform rating and $10.00 price target.

In the report, FBR Capital Markets noted, “We are initiating coverage of Aéropostale, Inc. (ARO) with a Market Perform rating and a 12-month price target of $10 per share. ARO has recently been victim to weak traffic and reduced teen spending, both of which have been exacerbated by execution issues that have lingered since mid 2012 (last positive comp was in 1Q12). ARO is currently in a turnaround stage, focused on repositioning its brand to higher-margin fashion items (currently 25% penetration) that it believes will increase average unit retail (AUR). While we are cautious on ARO and its effort to drive higher AUR, a recent stake taken by a subsidiary of a private equity firm has fueled takeout speculation. Much of the downside is likely already priced in, but we would remain on the sidelines until the company can show positive signs of its turnaround.”

Aeropostale closed on Tuesday at $9.55.