US Bancorp (USB) (HBI) (NTRS) (ST) (TCBI) (TWC) Price Targets Changed

US Bancorp (NYSE: USB), Hanesbrands (NYSE: HBI), Northern Trust Co. (NASDAQ: NTRS), Sensata Tech (NYSE: ST), Texas Capital (NASDAQ: TCBI) and Time Warner Cable (NYSE: TWC) had their price targets adjusted by analysts.

US Bancorp (USB) had its price target raised by Barclays Capital from $31.00 to $33.00. They have an “overweight” rating on the company.

Hanesbrands (HBI) had its price target raised by Barclays Capital from $30.00 to $35.00. They have an “equal weight” rating on the company.

Northern Trust Co. (NTRS) had its price target lowered by Barclays Capital from $65.00 to $60.00. They have an “equal weight” rating on the company.

Sensata Tech (ST) had its price target raised by Barclays Capital from $40.00 to $42.00. They have an “overweight” rating on the company.

Texas Capital (TCBI) had its price target raised by Barclays Capital from $26.00 to $28.00. They have an “equal weight” rating on the company.

Time Warner Cable (TWC) had its price target raised by Barclays Capital from $75.00 to $80.00. They have an “equal weight” rating on the company.

Foot Locker (NYSE:FL) FBR Top List Pick, Hanesbrands (NYSE:HBI)Removed

While FBR continues to like what Hanesbrands (NYSE:HBI) has done to deal with soaring cotton prices, they still believe it may take time for them to implement the changes, and have placed Foot Locker (NYSE:FL) as their as their "Top List Pick" while removing Hanesbrand.

FBR said, "With strong proxy data points out of competitor Finish Line (Nasdaq:FINL) and, more importantly, vendor partner Nike (NYSE:NKE), which posted North American futures orders +16% (sequentially accelerating from +15% in 2Q), we move Foot Locker to the FBR Top Picks list...While we continue to be constructive on Hanesbrands (OP-rated), with cotton prices at historic highs, near-term catalysts are lacking to offset the overhang (more sentiment than fundamentals, in our view) on shares. We continue to believe Hanesbrands is better positioned than most apparel vendors to handle product cost inflation— it has bought/hedged out cotton better and longer, implemented price increases, and maintained more supply chain levers to offset inflationary pressures. As a result, we believe fundamentals should hold up better than most, but this may take time to play out. That said, a material reversal in cotton prices over the near term could be a major catalyst for HBI shares."

FBR Capital maintains an "Outperform" rating on Foot Locker, which closed Wednesday at $19.54, down $0.27, or 1.36 percent. Hanesbrands closed at $24.94, down $0.42, or 1.66 percent. FBR raised their price target on Foot Locker from $21 to $23.

Hanesbrands (NYSE:HBI), Nike (NYSE:NKE), Under Armour (NYSE:UA) Have Low Cotton Exposure

Based upon their fairly low exposure to cotton, Hanesbrands (NYSE:HBI), Nike (NYSE:NKE) and Under Armour (NYSE:UA) are strongly positioned to be able to raise prices and defend margins in response to inflationary pressures.

On the other hand, Volcom (Nasdaq:VLCM), Quiksilver (NYSE:ZQK) and Gildan (NYSE:GIL) are the most exposed to cotton, and will struggle to maintain margins and earnings going forward.

FBR said, "We believe companies with relatively low cotton exposure and the ability to raise prices to offset inflationary pressures will outperform peers in FY11. We believe Hanesbrands (Outperform), Nike (Outperform), and Under Armour (Market Perform) are the best positioned within our coverage universe given Nike’s and Under Armour’s relatively low cotton exposure and Hanesbrands’ strong execution in locking in cotton costs at favorable levels and effectiveness at raising prices.

"We believe Volcom (Underperform), Quiksilver (Underperform), and Gildan (Underperform) are the worst positioned among our covered companies given relatively high cotton exposure and challenges to raising prices to offset product cost inflation."

Hanesbrands closed Wednesday at $25.37, down $0.09, or 0.35 percent. Nike closed at $88.58, down $0.70, or 0.79 percent. Under Armour ended the trading day at $54.78, down $1.97, or 3.47 percent. Volcom closed at $18.74, down $0.25, or 1.32 percent.
Quiksilver closed down at $5.16, losing $0.17, or 3.19 percent. Gildan closed at $29.37, down $0.44, or 1.48 percent.

Hanesbrands (NYSE:HBI) Strong on Wal-Mart (NYSE:WMT) Strategy

In a tough inflationary apparel market, FBR Capital said after meeting with Hanesbrands' (NYSE:HBI) management they see them as being in a better position than their competitors in a weak economy and rising costs market. They particularly pointed out their apparel strategy with Wal-Mart (NYSE:WMT).

They noted, "Last week, we hosted investor meetings with Hanesbrands' CEO Rich Noll and IR Brian Lantz. Our takeaways from these meetings keep us constructive in the name, as we continue to believe Hanesbrands is relatively better positioned than most to deal with mounting product cost inflation, and therefore, deliver robust earnings growth (+15% to +20% year over year) in FY11. We continue to like the brand's leading position in the basic apparel category (bolstered by Wal-Mart's (NYSE:WMT) apparel strategy of back to basics), where share gains, new programs, the Gear For Sports acquisition, and implemented price increases provide visible top-line growth in uncertain economic conditions."

FBR Capital maintains an "Outperform/Top Pick" rating on Hanesbrands, which closed Monday at $26, down $0.39, or 1.48 percent. FBR has a price target of $34 on them.

Gildan Activewear (NYSE:GIL), Quiksilver (NYSE:ZQK), Volcom (Nasdaq:VLCM) Most Exposed to Cotton Prices Says FBR

Commenting on the price of cotton, Chinese tightening, and the effect on companies, the most exposed in the view of FBR Capital are Gildan Activewear (NYSE:GIL), Quiksilver (NYSE:ZQK), Volcom (Nasdaq:VLCM). Also considered as having strong exposure to cotton are VF Corp (NYSE:VFC) and Hanesbrands Inc (NYSE:HBI).

FBR said, "The potential for tightening China monetary policy, European sovereign debt risk, and, more recently, the conflict in Korea have conspired to drive a strengthening U.S. dollar and popping of the commodity bubble, including cotton. As a result, apparel vendors who had chosen to wait to lock in cotton for 2H11, may (depending on buying/hedging strategies) be getting somewhat bailed out, but it is all relative in our opinion. Over the last few weeks, cotton prices are off -30% (March 2011 contract now at $1.17/lb, down from peak of $1.51/lb on November 9). While a technical reversal could continue over the near term (although in recent days it has flattened), we still believe the underlying supply/demand imbalance still holds (see the latest USDA report suggesting supply is tightening further) and will take time to be neutralized, supporting elevated cotton pricing over the intermediate term (supply from India will be worth monitoring). Pricing power will still be critical in looking to offset not only cotton, but other product cost inflation in labor and freight. If the air continues to get let out of the bubble, many apparel vendors may be able to lock in at more favorable rates (or, should we say, less worse rates), somewhat minimizing the risk to 2H11 estimates, and therefore mitigating the near-term cautious stance on the group and some of the select names we have highlighted. Although, it is worth noting that because supply is so tight, getting hands on cotton may be easier said than done. Also, while "apocalyptic" cotton risk may be off the table, most companies will still bear higher year-over-year cotton costs (cotton was $0.60s/lb on average in FY10) and other product cost inflation in labor/freight still exists, so consensus expectations for flat gross margin in FY11 still don't make much sense to us (unless you assume everyone can raise prices to offset). The potential exists for inverse correlation trading to continue—cotton pricing down, stocks up—including some of the names we've highlighted as the most exposed to cotton costs - Gildan Activewear, Quiksilver, and Volcom - as well as others that are perceived as having high exposure, including Hanesbrands Inc and VF Corp."

Gilden was trading at $30.79, rising by $0.71, or 2.36 percent as of 12:42 PM EST. Quiksilver was at $4.38, gaining $0.08, or 1.86 percent. Volcom traded at $18.37, increasing $0.37, or 2.06 percent. VF Corp stood at $84.65, up $1.77, or 2.14 percent. Hanesbrands Inc rose to $27.57, gaining $0.42. or 1.55 percent.