Auriga Reiterates a 'Buy' on American Eagle Outfitters (AEO); Compelling Buying Opportunity at Current Levels.

November 23, 2009 9:45 AM EST

Auriga reiterates a 'Buy' on American Eagle Outfitters (NYSE: AEO), price target $24.

Auriga analyst says, "Our rating reflects the anticipated positive impact of Executive Creative Director Roger Markfield on merchandising beginning in holiday 2009. Markfield, in our view, is the “Mr. October” of the merchandising organization. In addition to Markfield, we believe focus on improved promotional cadence and product flow, as well as sourcing initiatives and store growth beyond the American Eagle division, should drive results in FY10 and beyond. While we are concerned about the health of the consumer in FY10, we believe that the teen space will be a relative outperformer, given an improved fashion cycle, pent-up demand, and the natural need to replenish. That said, our thesis could be at risk if Markfield does not manage to engage the customer, leaves his position before new merchandising has fully gained traction, or has not built the bench strength in the merchandising organization. The stock is currently trading at a slight discount to its historical five-year forward 12-month P/E of 13.3x, which we believe represents a compelling buying opportunity and a favorable risk/reward."

To see all the upgrades/downgrades on shares of AEO, visit our Analyst Ratings page.

American Eagle Outfitters, Inc. is a retailer that operates under the American Eagle Outfitters, aerie by American Eagle (aerie), 77kids by american eagle (77kids) and MARTIN + OSA brands.

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