Deutsche Bank Upgrades American Eagle Outfitters (AEO) to Buy
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Deutsche Bank analyst, Tiffany Kanaga upgraded American Eagle Outfitters (NYSE: AEO) from Hold to Buy with a price target of $22.00 (from $17.00).
The analyst recognizes that the call is a little late considering the the stock's upswing after a tough April and May, but there is still enough runway for an upgrade and with reduced risk levels with dept. stores noting apparel strength and a solid start to Back-to-School.
The analyst thinks AEO will beat 2Q expectations through continued strength in women's denim and aerie, and can carry momentum forward into 2H vs. easier compares with a positive mix shift, improvement in men's, and further acceleration internationally and online.
The valuation remains inexpensive vs. historicals and peers and the PT increases to $22 from $17 on 15x the FY17 EPS estimate of $1.44.
Shares of American Eagle Outfitters closed at $18.93 yesterday.
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