Thursday, February 17, 2011

ASNA Target Price

The Ascena Retail Group (ASNA), known as Dress Barn prior to a corporate reorganization, closed today above my initial target price of $31.20. The stock has been up recently on above-expectation 2Q results and positive macroeconomic trends. ASNA is up 23.5% since inception into the portfolio.

After updating the model, I have re-evaluated the price target to $36.15 based on calendarized EPS of $2.41 and a P/E multiple of 15x. This represents 15% upside potential from current trading levels.

ASNA's second quarter conference call will be held on March 2. Dress Barn continues to hit on all cylinders as they continue to recognize synergy from the Justice acquisition. Consolidated comp performance for 2Q was 9%; resulting from 1% in dressbarn division, 17% from maurices, and 11% from Justice.


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