American Eagle Outfitters (AEO) Hits Fresh 52-Wk Low; UBS Expects Revised Comp Estimates From Peers

Yesterday, shares of American Eagle Outfitters (NYSE: AEO) fell almost 17% after reporting in-line (vs. consensus) earnings and disappointing guidance.

Today, shares are down again (-1.17%) and hit a fresh 52-wk low of $12.53, but have managed to come back to $12.67. This is an overwhelming sign that confidence isn't fully restored in the consumer and in retail spending, considering the markets are up big today (DOW +227.83pts, Nasdaq +68.56pts S&P500 +28pts) and nobody wants to chance buying up some AEO shares at depressed levels.

Several Brokerage/Analyst Firms made comments:

Yesterday afternoon, MKM Partners & Buckingham Research downgraded AEO to Neutral.

This morning, Piper Jaffray downgraded AEO from Overweight to Neutral. The analyst said, "Risks to our downgrade exist as shares have pulled back materially and near-term macro factors could be favorable for sector trading. Aggressive cost restructuring at AE could drive late 2010 margin improvement, lending credence to the company's stated mid-teens op margin goal in 2011. That said, we think execution remains spotty, which is likely to limit meaningful share price appreciation until visibility improves. We are reducing estimates and PT to $15/share based on a discounted to group average multiple of 12.5x....(Overall) Thesis had been optimistic; (but) timeline for recovery has been extended."

Susquehanna maintained a 'Positive' rating on shares, but cut its price target to $18.

Lastly, UBS kept its 'Neutral' rating on AEO, but cut its price target from $17 to $13.50. UBS analyst said, "While it is still early in 2Q heightened inventory levels (though mostly due to big denim investment) may keep a lid on comp/margin upside. Given some weather issues in May, we expect to see downward revised comp estimates for Aeropostale (NYSE: ARO), Abercrombie & Fitch (NYSE: ANF) and The Gap (NYSE: GPS)." UBS lowered FY10-11 EPS estimates slightly and view BTS as the next potential catalyst.

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

American Eagle Outfitters, Inc. offers on-trend clothing, accessories and personal care products.

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