Don't Wait Too Long To Buy American Eagle Outfitters Shares, Says Bluefin

"Our channel checks indicate that FYQ2 business trends have been very good as evident by a lot of chase activity taking place this quarter. Our sources continue to gush about the newness in the product that AEO has coming out, especially as we head into the all-important 2H:16 back-to-school season," analyst Rebecca Duval wrote in a note.

Performance And Expectations

On June 29, when the stock was at $15.63, Duval wrote that the Brexit pullback was a huge buying opportunity. Since then, the stock is closing in on $17. The analyst added, "In our opinion investors shouldn't wait too long to get into the stock as we think they will continue to outperform not only in the retail space but amongst all specialty retailers."

The analyst noted that American Eagle continues to be a stand-out in the specialty retail space and is bucking many investor concerns regarding tough year-over-year comparisons, as analyst's channel checks are thrilled about 2H:16 pipeline product.

Related Link: BMO Says American Eagle Is "On Trend"

"With only a couple of weeks left in FYQ2:16, we think revenue is trending slightly better than consensus estimate of $816 million," Duval highlighted.

In addition, the analyst added that American Eagle is one of the few specialty retailers that has consistently meet or exceeded analyst expectations over the last several quarters, which is of particular recognition considering the universally tough market conditions.

Valuations

In terms of valuation, American Eagle trades at almost a 50 percent P/E discount compared to its closest competitor, Abercrombie & Fitch Co. ANF (AEO 13.3x FY1 P/E, ANF 23.3x FY1 P/E).

The analyst said, "This is a stock that will get away from investors if they're slow to get involved in the name."

At time of writing, shares of American Eagle were up 0.99 percent to $16.89. Duval's $22 price target implies an upside of 31.5 percent over Tuesday's close.