Wedbush Cuts Price Target on American Eagle (AEO), Valuation Exceeds Business Fundamentals
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Price: $16.17 -0.8%
Rating Summary:
12 Buy, 24 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
12 Buy, 24 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Wedbush is maintaining its Neutral rating on shares of American Eagle Outfitters (NYSE: AEO), but is cutting its price target from $13 to $11 due to weakening sales.
The firm is skeptic that the company will be able to compete in a market were Abercrombie & Fitch (NYSE: ANF) controls the upper end and Aeropostale, Inc. (NYSE: ARO) comes in at the bottom.
Wedbush notes that recent checks indicate slowing traffic and high margin pressure. As a result, the firm is cutting its Q2 EPS estimate from $0.13 to $0.10 and its FY11 from $1.02 to $0.92. It also lowered its FY12 from $1.08 to $1.03. Upside to the firms estimates may come from aggressive SG&A cuts as management continues to evaluate additional areas for efficiencies following phase 1 savings of $20-30 million announced on November 18, 2010.
With both AEO and ARO expected to report comps on average of 4.4 percent from 2004-2011, and the fact that ARO has delivered over double the amount of EPS growth over the last five years, Wedbush believes that the two companies should trade on par. Shares of ARO closed on June 23 at $17.51 while shares of AEO closed at $12.88.
For more ratings news on American Eagle Outfitters click here and for the rating history of American Eagle Outfitters click here.
Shares of American Eagle Outfitters closed at $12.88 yesterday.
The firm is skeptic that the company will be able to compete in a market were Abercrombie & Fitch (NYSE: ANF) controls the upper end and Aeropostale, Inc. (NYSE: ARO) comes in at the bottom.
Wedbush notes that recent checks indicate slowing traffic and high margin pressure. As a result, the firm is cutting its Q2 EPS estimate from $0.13 to $0.10 and its FY11 from $1.02 to $0.92. It also lowered its FY12 from $1.08 to $1.03. Upside to the firms estimates may come from aggressive SG&A cuts as management continues to evaluate additional areas for efficiencies following phase 1 savings of $20-30 million announced on November 18, 2010.
With both AEO and ARO expected to report comps on average of 4.4 percent from 2004-2011, and the fact that ARO has delivered over double the amount of EPS growth over the last five years, Wedbush believes that the two companies should trade on par. Shares of ARO closed on June 23 at $17.51 while shares of AEO closed at $12.88.
For more ratings news on American Eagle Outfitters click here and for the rating history of American Eagle Outfitters click here.
Shares of American Eagle Outfitters closed at $12.88 yesterday.
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