AnnTaylor Stores (NYSE:ANN) Selloff Overdone Say Janney Montgomery Scott

AnnTaylor Stores (NYSE:ANN) sold off about 6 percent of what appears to be a read-through trade based on the slashing of guidance by Talbots (NYSE:TLB).

JMS says, "On January 11, ANN sold off roughly 6% on what we believe was a read-through trade from the dramatically lowered guidance issued by Talbots (NYSE:TLB). TLB commented specifically on not seeing improvements in weeks 4 and 5 of December as they went deeper into promotions. We believe it is important to note that the issues faced by TLB appear to be company-specific issues with merchandise and promotions; as such, we would use the recent sell-off to accumulate shares of ANN...We do not see risk to our and the consensus estimate of $0.14 for 4Q10 and believe there could be potential for upside. We are also comfortable with our FY2011 EPS estimate of $1.66 versus the street at $1.63."

Janney Montgomery Scott maintains a "Buy" rating on AnnTaylor Stores, which was trading at $24.24, up $1.60, or 7.11 percent, as of 12:43 PM EST. Talbots was trading at $6.12, down $0.12, or 1.92 percent. Janney has a price target on AnnTaylor of $32.