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NEW YORK — Shares of True Religion Apparel Inc., which makes premium denim and apparel, sank on Tuesday after an analyst downgraded his rating to "Hold," saying the stock is fairly valued.
Lazard Capital Markets analyst Todd Slater said in a note to investors that True Religion's shares are up 77 percent since the beginning of the year and well above his $28 price target.
Shares fell $1.83, or 5.6 percent, to $30.90 during afternoon trading. The stock has traded between $16.92 and $34.17 in the past 52 weeks.
The general market sank as well, as investors fretted over the growing debt crisis in Europe. Stocks dropped sharply around the world on concerns that European countries would fail to approve a $144 billion bailout package for Greece. By early afternoon the Dow Jones industrial average was down more than 230 points, erasing a 143-point gain on Monday.
Specific to True Religion, Slater wrote that "With the stock more properly valued, we believe that the risk/reward no longer favors adding to positions at this time."
Still, he said he expects strength when the company, based in Vernon, Calif., reports fiscal first-quarter results after the market closes Tuesday.
"We believe that the stock is pricing in some level of upside, given sales and margin strength widely reported by the rest of the sector," Slater wrote. "Investors have especially high expectations with regard to the direct-to-consumer (retail) and international divisions, especially since True Religion surprised positively on both in the fourth-quarter."
