FBR Reiterates Outperform On Children's Place; Sees Big Upside Due To Management

FBR &Co.'s Susan Anderson reaffirmed her Outperform rating on Childrens Place Inc (NASDAQ: PLCE) and kept the price target at $85.

Anderson reported Children's Place had an "impressive quarter" with an EPS of $1.32 vs. estimates of $1.04. Comps across the company's profile were performing positively, and the "wear-now assortments resonated particularly well with customers," Anderson noted. The company also saw a together margin on clearance/inventories due to well-managed allocation and pricing.

Related Link: Morgan Stanley On Children's Place: "The Kids Are Just Fine"

Key Points

• Anderson believes "management is being prudent given the uncertain, choppy retail environment, and comp performance could lead to upside."
• The change in guidance of $1.00–$1.06 is due to "accelerated investments in China, continued investment in its online wholesale channel, and increased compensation expense," Anderson stated.
• Children's Place will start selling online in China in early 2017.
• The company is reaping the benefits of its new "company-wide transformation strategy" of better inventory management, allocation and replenishment system, Anderson said.

Shares of Children's Place were up 2.74 percent pre-market on Wednesday trading at $71.05.