TLB Strengthens its Balance Sheet

Analysts at Credit Suisse maintain their “neutral” rating on The Talbots Inc (NYSE: TLB), while raising their estimates for the company. The target price for TLB has been raised from $7 to $9.

Talbots has announced a transaction that would effectively lead to a merger between TLB and BPW. The company has also announced its plan to repay all its debts and retire shares held by Aeon, its parent company. The transaction adds significant value for TLB’s shareholders and strengthens the company’s balance sheet, Credit Suisse says.

TLB has reported its Q3 results substantially ahead of the estimates, driven by strong gross margins and cost savings. Credit Suisse has raised its EPS estimates for FY09 and FY10 from -$1.39 to -$0.45 and from -$0.74 to -$0.27, respectively.