Cowen analysts say there is growth potential at the 48-store Bebe Sport, which is slated to have 59 stores by the end of the retailer's fiscal year. They also expect more openings of the company's 189-store namesake chain, as well as expansions of units in that chain to accommodate a larger product assortment.

Cowen's upgrade was given despite Bebe's slower-than-expected recent sales. Same-store sales rose 4% in December year over year due to a slowdown in the final weeks of the month.

The firm is optimistic about Bebe's growing consumer-loyalty program, and its extension multi-channel sales as well. Additionally, Cowen likes the rollout of the higher-priced Collection Bebe in more stores as well as a growing intimates line.