After beating on the earnings front but missing on the revenues front on Wednesday, American Eagle Outfitters was in the spotlight of many major Wall Street research firms.
Stifel
Analysts at Stifel highlighted that earnings rose 59 percent year-over-year, adding, “Favorable customer response to the company’s improved merchandise, better quality product, and more compelling shopping experience fueled full priced sales and less promotional activity, driving margin expansion.”
Strength was seen across segments, setting up a solid start for the holiday season and the fourth quarter.
This, added to the designation of Jay Schottenstein as permanent CEO, led the firm to reiterate a Buy rating and $20 price target on the stock.
Piper Jaffray
Taking into account the “continued momentum against a tough backdrop for apparel retailing and coupled with growth prospects in international, Aerie and the recently acquired Todd Snyder/Tailgate,” Piper Jaffray analysts Neely Tamminga and Kayla Wesser reiterated an Overweight rating and $21 price target on American Eagle’s stock.
The experts believe the company is poised to increase its market share across its brands, both during the holiday season and into 2016, even in spite of investors’ "difficult comparisons" concerns. Their bullishness is somewhat supported by the management’s strong guidance and the encouraging retail comps cited on Wednesday’s call.
Oppenheimer
Oppenheimer’s Anna Andreeva and Janet Lynne Knopf are not as bullish as their peers. After the earnings call, the experts gave the stock a Perform rating and $17 price target, noting that, while the company continues to win in a difficult environment, tough compares are looming.
The experts pointed out the company’s high comps, surging gross margins and well managed inventories. “While slightly positive store comps over Black Friday are impressive given the environment, with DTC, estimate AEO is currently running in line with MSD comp guide, and December/January compares get tougher; stacks meaningfully more challenging into '16,” the report explicated.
Net net, the firm decided to raise its EPS estimates for the fourth quarter of the year and the year to come, but still see the company’s risk/return as neutral due to “tougher top line/margin compares ahead.”
Jefferies
Finally, analysts at Jefferies reiterated a Buy rating and $24 price target following the earnings call. American Eagle remains poised to increase its share in the teen space, with sales momentum continuing into the fourth quarter and a solid Thanksgiving weekend (despite the complicate landscape), they assured.
The firm continued to declare it would be a buyer of the stock “given clear brand strength, improved stability in the organization, margin and FCF improvement upside opportunity ahead, and a teen industry backdrop that is starting to improve.”
The retailer’s shares closed on Thursday down more than 3 percent, trading at $15.32.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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