Betty Chen, analyst at Wedbush Morgan, recommended Gymboree (GYMB) as a STRONG BUY based on:

a. continued business momentum, sourcing benefits and improving profitability at Crazy 8 [stores] to enable the company to exceed historical peak operating margins and raise forward guidance.

b. continues to outperform due to their solid pricing strategies, which when coupled with brand-appropriate designs and product quality, enables the brands to differentiate themselves from the competition.

c. believes management will raise second-quarter earnings-per-share guidance when they report full second-quarter sales in early August and serve as a positive catalyst for the stock.

d.  ability to benefit from increasing purchasing power and strategic diversification of manufacturers.

e  recommend investors capitalize on unwarranted pullback in shares of Gymboree

f. Our 12-month price target of $52

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