S&P Upgrades American Eagle (AEO) From Strong Sell to Hold

S&P Upgraded American Eagle Outfitters

From Strong Sell to Hold, yesterday. They upgraded their fiscal-year 2011 (Jan) and 2012 EPS estimates to $0.96 and $1.08 from $0.94 and $1.07. They raised their target price to $17 from $10. Since American Eagle is trading at $16.66 today, S&P has already missed this current move. AEO did trade close to $20 back in March. Here are a few quotes from the report: “AEO reports better than expected September sales- a 4% comparable gain vs. our flat estimate. We are impressed with improved trends in women's (up high single digits) and denim's continued strength. Despite our expectation of weak teen apparel sales, as we see high unemployment and alternative categories mitigating apparel sales gains, we think improved assortments and controlled inventory position AEO well for the holiday. We up our fiscal-year 2011 (Jan) and 2012 EPS estimates to $0.96 and $1.08, from $0.94 and $1.07. Applying peer 17.5X P/E to our 2011 estimate, we lift target price to $17 from $10./M. Driscoll-CFA”