Analysts: Teen 'Malaise' Hurts American Eagle Outfitters

American Eagle Outfitters AEO gained 9 percent on better-than-expected third-quarter results, but a couple of analysts were unmoved.

"The teen consumer remains in a malaise about shopping for apparel," Wunderlich's Eric Beder said in a note maintaining a Hold rating and $11 target on the Pittsburgh-based specialty retailer.

A continued contraction in the market for youth-oriented denim clothing, as well as the growth of lower-priced, higher-fashion outlets like Forever 21, Zara and H&M will put a continued squeeze on American Eagle, in the view of Morgan Stanley's Kimberly C. Greenberger.

Greenberger maintained an Under-Weight rating and $9.50 target on the company.

American Eagle said it expects third-quarter adjusted earnings of $0.22 per share when it posts results December 4. That's $0.04 higher than expected and compares with $0.19 a year earlier.

Chairman and interim Chief Executive Jay L. Schottenstein told Wall Street he's "encouraged" by reduced promotions, but warned that "on-going weakness in mall traffic" is holding back results.

Greenberger said the company's expected earnings make for its weakest third quarter since 2003, and she now sees a 21 percent earnings decline for 2014, on top of a 47 percent drop last year.

Wednesday's earnings pre-announcement "wasn't the disaster we saw last week from Abercrombie & Fitch Co.," Beder said. But shares of teen apparel retailers will remain range-bound "with tepid fashion trends and lack of interest by their core customers."

American Eagle traded recently at $13.63, up 9 percent.