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Despite the broad-market woes that led to the Dow Jones IndustrialAverage's (DJIA) 45-point deficit, the shares of Gymboree ( GYMB : sentiment , chart , options ) managed to close the day in the black. The children's clothier gota boost from Wedbush Morgan, which upgraded the shares to "strongbuy" from "buy," setting a price target of $52 for the equity.What's more, the analyst raised its 2008 earnings estimates to$3.16 per share, compared to previous predictions of $3.14 pershare, and upped its fiscal-year revenue forecast to $1.037 billionfrom $1.032 billion. Analysts, on average, are predicting 2008earnings of $3.14 per share on revenue of $1.04 billion.
Wedbush Morgan analyst Betty Chen attributed the positive revisionto continued business momentum, sourcing benefits, and improvingprofitability at GYMB's retail division Crazy 8. Chen also notedthe retailer's "solid" pricing strategies and leading positionamong children's apparel providers, and predicted that thecompany's strong business in the most recent quarter will motivateGYMB to raise its second-quarter earnings guidance when it reportsquarterly sales figures early next month.
As a result of the news, the shares of GYMB ended the session witha gain of $1.78 (or 5.17%) at $36.18. The equity is now attemptingto maintain its perch atop long-term support from its 40-monthmoving average, a trendline the stock hasn't closed a month belowin more than 3 years.
So, could more upgrades be on the way? According to Zacks , there's ample room for bearish brokers to change their tunes,with only 2 of the 8 ranking analysts rating the stock a "buy" orbetter. In addition, short sellers could act as a potentialcatalyst higher, with short interest accounting for roughly 19% ofGYMB's total available float. Should the shorts get spooked by thesecurity's recent upward momentum, a short-covering rally wouldtake more than 5 trading days at the stock's average daily tradingvolume to unwind.