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FBR Capital Starts Coverage on Macy’s, Abercrombie with “Outperform” Rating (M, ANF)

Analysts at FBR Capital Markets on Wednesday initiated coverage on several retail and department store stocks, including Macy's, Inc. ( M

) and Abercrombie & Fitch Co. ( ANF ) .

The firm awarded M and ANF with "Outperform" ratings, noting optimism about potential earnings beats.

An FBR Capital analyst commented, "Through year-end, we expect the stocks to continue to outperform the market. Sentiment seems mixed and conviction low among retail investors. We believe sales trends will be modestly better than consensus expectations, and we see more opportunities for earnings upside than downside. We believe inventory concerns are overdone, and, for the most part, promotional levels look reasonable. We are concerned about sourcing costs for 2011, but retailers are working hard to mitigate costs. Furthermore, higher sourcing costs could ease promotional price pressure in the industry. We believe CY11 estimates look conservative and valuation is reasonable."

Macy's shares rose 15 cents, or +0.6%, while Abercrombie stock was mostly flat in premarket trading Wednesday.

The Bottom Line

Shares of Macy's ( M ) have a .85% dividend yield, based on last night's closing stock price of $23.52.

Shares of Abercrombie & Fitch [[ANF] have a 1.80% dividend yield, based on last night's closing stock price of $38.81.

Macy's, Inc. ( M ) and Abercrombie & Fitch Co. ( ANF ) are both rated "Neutral," holding Dividend.com DARS™ Ratings of 3.2 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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