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Aeropostale shares rise on BMO upgrade

NEW YORK (AP) -- Aeropostale's shares rose Wednesday as an analyst raised his rating and price target for the teen retailer, saying it seems that a turnaround is taking hold.

THE SPARK: John Morris of BMO Capital Markets raised Aeropostale Inc. to "Buy" from "Market Perform" and lifted its price target to $20 from $13.

THE BACKGROUND: Aeropostale has been struggling for some time with tough competition and fickle young shoppers. The company had clothing left over that didn't sell in the holiday shopping season, and it's been contending with sluggish economic conditions. Still, in March CEO Thomas Johnson said that the retailer was making progress by updating merchandise and developing a new model for its stores.

THE ANALYSIS: Morris said in a client note that he previously believed it would take the chain some time to freshen up its fashion offerings. With a new merchandising team in place, the analyst said it appears Aeropostale is in the early stages of "rejuvenating its offering and balancing inventory between fashion and core basics."

Morris said the fashion reboot gives him more confidence that management can execute its turnaround plan. He believes the current stock price gives an appealing entry point to investors.

It is Aeropostale's policy not to comment on analyst reports.

SHARE ACTION: Up 81 cents, or 5.3 percent, to $16.19 in afternoon trading. Over the past year, the stock has traded between $11.76 and $20.99. The shares are up 18.2 percent year-to-date.