True Religion shares jump after 1Q profit rises, upgrade

NEW YORK - Shares of True Religion Apparel Inc. spiked Friday morning after the jeans maker's 35 percent jump in first-quarter profit and increased guidance led an analyst to raise his rating.

The stock jumped $2.76, or 14.2 percent, to $22.27.

Wedbush Morgan Securities analyst Jeff Mintz upgraded the Vernon, Calif., company to "Buy" from "Hold" and raised his price target to $25 from $18.

The new target implies he expects the stock to jump 28 percent over Thursday's $19.51 close.

"We believe the brand is a core denim resource for the company's high-end department store retailers, and the True Religion customer does not appear to be impacted by the consumer slowdown that has hurt so many apparel companies," Mintz said in a note to clients.

Greater sales through its Web site and own store locations will likely boost expectations for 2008, he said.

True Religion sells its products through retailers nationwide and has 15 of its own stores, with plans for many more.

For 2008, Mintz now expects earnings of $1.59 per share on revenue of $226 million, compared with a previous estimate of $1.52 per share on revenue of $215 million.

Analysts polled by Thomson Financial expect, on average, 2008 earnings of $1.51 per share on revenue of $214.2 million.

Brean Murray, Carret & Co. analyst Eric Beder raised his price target to $29 from $24 and reiterated a "Buy" rating.

Beder said in a note to clients that True Religion is moving "toward becoming a true lifestyle brand with the ability to register consistent, superior returns worthy of a premium multiple."

Friedman, Billings, Ramsey & Co. analyst Karen Short kept an "Outperform" rating and $25 price target after the results.

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