Nomura Securities Maintains a 'Neutral' on Aeropostale, Inc. (ARO); Lowered Outlook
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Price: $0.15 --0%
Rating Summary:
5 Buy, 25 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
5 Buy, 25 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Nomura Securities maintains a 'Neutral' on Aeropostale, Inc. (NYSE: ARO).
Nomura analyst, Paul Lejeuz, "After pre-announcing 1Q results 50% worse than guidance at the time (May 5), the company today provided 2Q guidance which is 50% below current consensus. Off-target assortments in its women’s business have hurt the top line and will force ARO to take significant markdowns in 2Q to clear goods. After 10+ years of positive comps, we are only a few qtrs into seeing negative comps, so it's difficult to tell the level at which comps (and margins) will stop falling. Although the stock is likely to open weak today, we believe it is still too early to buy. Significant uncertainty remains regarding sales and margin trends, and a 2H turnaround in women’s seems optimistic at this point. While ARO’s 9% FCF yield may catch people's attention, there is little visibility on how far lower FCF can fall. Thinking across the sector, we think ARO's troubles are bad news for American Eagle (NYSE AEO), as ARO's promotions are going to pick up further.
For more ratings news on Aeropostale, Inc. click here and for the rating history of Aeropostale, Inc. click here.
Shares of Aeropostale, Inc. closed at $21.34 yesterday.
Nomura analyst, Paul Lejeuz, "After pre-announcing 1Q results 50% worse than guidance at the time (May 5), the company today provided 2Q guidance which is 50% below current consensus. Off-target assortments in its women’s business have hurt the top line and will force ARO to take significant markdowns in 2Q to clear goods. After 10+ years of positive comps, we are only a few qtrs into seeing negative comps, so it's difficult to tell the level at which comps (and margins) will stop falling. Although the stock is likely to open weak today, we believe it is still too early to buy. Significant uncertainty remains regarding sales and margin trends, and a 2H turnaround in women’s seems optimistic at this point. While ARO’s 9% FCF yield may catch people's attention, there is little visibility on how far lower FCF can fall. Thinking across the sector, we think ARO's troubles are bad news for American Eagle (NYSE AEO), as ARO's promotions are going to pick up further.
For more ratings news on Aeropostale, Inc. click here and for the rating history of Aeropostale, Inc. click here.
Shares of Aeropostale, Inc. closed at $21.34 yesterday.
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