Susquehanna Maintains a 'Positive' Rating on American Eagle Outfitters (AEO), Lowers Earnings Estimates and Price Target
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Susquehanna maintains a 'Positive' rating on American Eagle Outfitters, Inc. (NYSE: AEO), but lowers price target to $18.
Susquehanna analyst says, "AEO posted an October comp decline of 12%, well below our forecast of negative 4-6%. Performance continued to be hampered by inconsistent and negative trends in shopper traffic, as well as increased promotional activity, which negatively impacted the AUR. AEO continues to emphasize a strong value message, and featured a buy-one, get-one 50% off (BOGO) promotion on the entire store for the majority of the month, which was noted to generate positive shopper response. Reflecting the sales and margin deceleration in October, management lowered its 3Q08 EPS expectation to $0.30 from $0.31-$0.34. Guidance does not include an anticipated "other than temporary charge" related to Auction Rate Securities (ARS), which will be disclosed when the valuation is complete. We are reducing our 3Q08 EPS projection by $0.02 to $0.30 (vs. $0.45). Based on a more conservative sales and margin outlook, we are lowering our 2008 and 2009 EPS projections by $0.13 and $0.17 to $1.28 and $1.40, respectively...Given AEO's well managed inventories, stringent control of expenses, solid balance sheet and value positioning, we are maintaining our Positive rating."
American Eagle Outfitters, Inc. is a retailer that operates under the American Eagle Outfitters, aerie by American Eagle and MARTIN + OSA brands.
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