UPDATE 1-RESEARCH ALERT-Deutsche Banks ups Nordstrom to buy

Nov 2 (Reuters) - Deutsche Bank upgraded Nordstrom Inc (JWN.N: Quote, Profile, Research) to "buy" from "hold," saying it sees sales increases, lean inventory and cost reductions driving earnings-per-share growth at the upscale department store chain.

The brokerage, which raised its price target on the stock to $45 from $36, expects the company's comparable sales to grow 8 percent in October.

"Nordstrom is navigating better than expected in this difficult consumer spending environment," analyst Bill Dreher said in a note to clients.

"Sales improvements, careful control of costs and capex, and tight management of inventories will drive growth going forward," Dreher added.

Dreher raised his third-quarter earnings-per-share forecast for the company to 40 cents from 31 cents and his full-year earnings-per-share forecast to $1.84 from his earlier estimate of $1.55.

Nordstrom is due to report third-quarter earnings on Nov. 12.

Dreher also said the company had successfully anticipated consumers' need for value in the downturn and sharpened price points, down 10 percent storewide, since last fall.

Shares of Nordstrom closed at $31.78 Friday on the New York Stock Exchange. (Reporting by Abhishek Takle in Bangalore; Editing by Himani Sarkar)