Wolfe Research Downgrades American Eagle Outfitters (AEO) to Peerperform (Earlier)
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Wolfe Research downgraded American Eagle Outfitters (NYSE: AEO) from Outperform to Peerperform.
Analyst Adrienne Yih commented, "As a reminder, our ratings are relative ratings within our coverage universe, and as such, we believe for 2017 there are investment opportunities that present a better risk/reward profile. We are downgrading AEO to Peer Perform from Outperform based on 1) two-year successful recovery back to ~10%+ operating margins, higher than any other Teen retailer, 2) deeper YoY promotional cadence offset by average unit cost (“AUC”) reduction, 3) ongoing competitive pricing environment, particularly in the Teen sector, with Aeropostale remaining as a going concern into 2017 with ~400 stores, and 4) decelerating sales-to-inventory spread and GMROI peaking. We believe shares reflect the positives, including a new AE brand fall marketing campaign, lower AUC, and aerie momentum."
Shares of American Eagle Outfitters closed at $18.29 yesterday.
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