Another Triumphant Day for Retail; LTD in Focus

Retail stocks are having another strong day following yesterday’s record March sales growth.

Moody’s today raised its estimation of the “sector outlook” for the retail group to “Positive” from “Stable.”

Operating income for retailers this year is expected to rise “in the mid-single digits” writes Moody’s analyst Maggie Taylor, driven by consumer spending, not just cost-cutting.

However, Moody’s is watching to see whether persistent unemployment, tight consumer credit, and the end of fiscal stimulus in the U.S. will drive operating income growth down to the “low single digits” this year, which might prompt a reversal of the group’s outlook to “Stable” again.

Meantime, UBS Securities retail analyst Roxanne Meyer, looking at specialty retailers, writes that there’s still potential for upside after yesterday’s big numbers. Meyer raised her price target on Limited Brands (LTD), which owns Victoria’s Secret, to $30 from $25, writing that the company has had frequent product launches to stir up excitement, but has also kept discounting to a minimum, which should produce rising profit margins. Limited yesterday turned in same-store sales growth for March of 15%, more than double what analysts were expecting.

Credit Suisse’s Paul Lejuez also raised his rating on LTD to $30, and raised his estimate for this year’s profit to $1.78 from $1.64. He raised his Q1 EPS estimate to 19 cents from 11 cents following the stronger-than-expected same-store results.

LTD stock is up 10 cents, or 0.4%, at $26.38

Other movers and shakers in retail today:

Hot Topic (HOTT) is up 20 cents, or 3%, at $8.04; American Eagle (AEO) is up 23 cents, or 1.3%, at $17.68; Abercrombie & Fitch (ANF), despite being a disappointment yesterday and seeing its shares fall, is up $1.94, or 4%, at $48.84; The Gap (GPS) is up 18 cents, or 0.7%, at $24.77; Nordstrom (JWN) is up 83 cents, or 2%, at $42.27; and Macy’s (M) is up 44 cents, or 2%, at $23.09.

Among the losers: Yesterday’s star, Cato (CATO), is off 7 cents, or 0.3%, at $23.60; The Buckle (BKE) is down 34 cents, or 0.9%, at $37.74; Aeropostale (ARO) is off a penny at $30.11, and Zumiez (ZUMZ) is off 25 cents, or 1.2%, at $20.16.