Insiders' Blog

In the wake of Aeropostale's (NYSE: ARO) disappointing Q1 report yesterday, many are questioning the viability of the company's turnaround efforts. This morning several analysts commented with thoughts on Aeropostale. Brean's Eric Beder made the argument for bears. Wedbush analyst Betty Chen argued the bull case.

Yesterday Aeropostale reported Q1 EPS of ($0.16), $0.01 better than the analyst estimate of ($0.17). Revenue for the quarter came in at $452.3 million versus the consensus estimate of $444.26 million. Comps decreased 14%. Q2 guidance was below the Street at ($0.20)-($0.15) versus the consensus of ($0.06).

Commenting, Beder said, "We believe the near-term euphoria in the name remains undeserved and Aeropostale faces competitive and pricing issues that we believe will, in the near term, obviate any gains from new, fashion driven merchandise which is on track to roll out for back to school . . . At best, ARO apologists can point to back to school for a possible turn; we believe the case for a turn at the business continues to fade and the Aeropostale business model remains under highly competitive pressures and limited pricing flexibility that should continue to disappoint investors."

Chen obviously disagrees. She thinks enhanced fashion mix, a nimble supply chain, and leaner buys will support comps and margins in H2.

"While we view below-consensus Q2 guide as disappointing, we note the critical elements of the ARO turnaround story remain intact as we anticipate the launch of revamped BTS assortments complemented by a more emotional marketing campaign and distinct planning and allocation system in H2 to restore business fundamentals . . . Management is focused on head-to-toe dressing, elevated trim and finishes, and emotional in-store presentation/marketing along with the ability to chase better-performing items within ~20-120 days and leaving +LDD open to buy. Moreover, implementation of allocation by store profile currently underway could drive efficiency/margin benefits," she said.

Aeropostale trades lower by 6% pre-market on Friday.

Brean has a Sell Rating on Aeropostale with a price target of $11.

Wedbush has an Outperform rating on Aeropostale with a modified price target of $17.00 (from $15.00).

For an analyst ratings summary and ratings history on Aeropostale, Inc. (NYSE: ARO) click here. For more ratings news on Aeropostale, Inc. click here.

Shares of Aeropostale, Inc. closed at $16.48 yesterday, with a 52 week range of $11.76-$20.99.

Microsoft Corp (NASDAQ: MSFT) wins case brought upon by Google's (Nasdaq: GOOG) Motorola unit over Xbox, according to Bloomberg headlines.

(Updated - May 23, 2013 4:20 PM EDT)

Intuitive Surgical (Nasdaq: ISRG) shares are up in late trading Thursday after a favorable verdict came in for the company.

A Seattle-area jury voted in favor of Intuitive over claims of negligence for its da Vinci surgical robot. The company was sued by a patient's family stemming from a 2008 surgery. The family blamed a lack of doctor training in using the device. Plaintiffs were seeking $8.45 million in damages.

Shares are up about 4 percent.

(Updated - May 23, 2013 3:56 PM EDT)

Investors watched in horror this morning as shares of American Electric Power Co (NYSE: AEP) crashed 54% on the open. NextEra Energy (NYSE: NEE) was also affected. Its stock dropped 62%. Both stock later recovered and traded down by only a few percent.

The crash resulted from an order imbalance. Importantly, trades were not subject to limit up/ limit down rules because trades took place before 9:45, when restrictions begin. In August new rules will expand limit up/ limit down for the full day, but as of now those rules do not exist.

The crash added to jitters, creating an uncomfortable vibe as investors looked across the Pacific to Japan's battered stock market.

Update: This afternoon the NYSE said trades between 9:30 and 9:31 are still valid trades and will stand. The trades will be marked with an Aberrant Report Indicator and will be excluded from high and low data. AEP traded as low as $22.28. NEE traded down to $30.37.

Angie's List, Inc. (Nasdaq: ANGI) shares are ticking higher following positive commentary from co-founder and CEO William Oesterle to Reuters on Thursday. The executive was responding to negative comments in a recent Citron Research piece.

Oesterle noted that a recovery in the U.S. market could help Angie's List to post its first profit in 2014. He noted that 2013 was a year of transition and the most important factor is cash flow. After cutting marketing costs, the company posted its first positive cash flow with its latest earnings report. It reported spending just $72 for every paid member of its website, versus $82 in the same period last year.

Cash-in-hand has been a concern for investors, notes Reuters. With its latest report, the number was about half of when it came public in November 2011.

One of the other criticisms is that Angie's List has a system that provides for only 'AA'-rated companies, the highest out of six possible going all the way down to 'F'. The company doesn't charge a membership to start, but then begins charging when a number of members and businesses reviewed in a certain area rises. The company also derives most of its revenue from ad sales and only 'A' or 'B'-rated companies are allowed to advertise on the site.

Oesterle said that Angie's List has about 2 million companies rated, but only 300,000 are eligible to advertise due to overall grade and number of reports.

Angie's List competes with Yelp (Nasdaq: YELP) and HomeAdvisor. Shares are up about 2.7 percent Thursday.

For the Citron report, click here.