FBR Capital Markets Comments on Abercrombie & Fitch Following LBO Analysis

In a report published Wednesday, FBR Capital Markets analyst Susan Anderson commented on recent developments related to Abercrombie & Fitch Co. (NYSE: ANF).

In the report, FBR Capital Markets noted, “In our LBO model, ANF had the highest potential IRR at 34%, followed by ARO at 29% and AEO at 25%. ARO's rising stock price (up 28% since September) and deteriorating FCF and profitability are what is driving returns lower, though an LBO is still possible if quick operational improvement could occur. ANF is in a prime position given its low leverage, higher profitability, FCF, and attractive valuation. AEO is the most expensive of the three and has less opportunity to improve profitability given it has been the best run of the three.”

Abercrombie & Fitch closed on Tuesday at $33.62.