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Wunderlich: American Eagle Outfitters Q1 Outlook May Disappoint

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American Eagle Outfitters (NYSE: AEO) may offer a first-quarter outlook below Wall Street's expectations when it posts results Wednesday, according to an analyst.

Shares of the teen apparel retailer changed hands recently at $14.84, off $0.14. American Eagle is up more than 6 percent since December.

The Pittsburgh-based company is facing uncertainty from clogged West Coast ports, as well as continued below average temperatures across much of the U.S.

Those factors, combined with "management's somewhat conservative bent" could result in a company earnings forecast below the consensus, Wunderlich's Eric Beder said.

Beder maintained a Hold rating and $11 target on American Eagle, calling its current valuation "aggressive" in light of the company's lack of a permanent chief executive as well as heavy competition in the teen apparel market, which Bender characterized as "a low-growth wasteland."

The company raised its fourth quarter outlook in January, citing reduced discounting as well sales of denim apparel and dresses.

Beder sees the potential for a modest fourth quarter earnings beat, citing the company's focus on keeping both costs and inventory lean.

American Eagle has been lead by interim chief executive and major shareholder Jay L. Schottenstein since January 2013.

Beder called the year-long search for a permanent CEO "another somewhat worrisome issue" for American Eagle.

Latest Ratings for AEO

DateFirmActionFromTo
Dec 2016Stifel NicolausMaintainsBuy
Nov 2016FBR CapitalDowngradesOutperformMarket Perform
Nov 2016Wolfe ResearchDowngradesOutperformPeer Perform

View More Analyst Ratings for AEO
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Posted-In: Eric Beder WunderlichAnalyst Color Analyst Ratings

 

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