Janney Montgomery Scott Maintains a 'Neutral' on Aeropostale (ARO);

Janney Montgomery Scott maintains a 'Neutral' on Aeropostale, Inc. (NYSE: ARO), lowers fair value from $13 to $11.

JMS analyst says, "We continue to expect the teen atmosphere to remain highly promotional, and we believe that as the spread between ARO's price points relative to its competitors continues to narrow, peers may be recapturing share taken by ARO over the past few years. The company's core businesses - polos, tees, denim, hoodies, camis - are commoditized offerings and therefore are among the most price competitive, which is hurting them. We expect sustainable negative comp trends for ARO throughout 2011 and 2012. Further, with inventories outpacing the change in sales, we caution that ARO may see further pressure to margins beyond 3Q. Although management's execution has been exceptional over the past several years, especially during the recession, we remain concerned about (1) increasing price competition among teen competitors, (2) ongoing high teen unemployment, and (3) upcoming AUC pressure facing the sector."

"Our FY11 goes to $0.78 from $1.16 (versus the Street at $1.04) and FY12 to $1.07 from $1.34 (versus the Street at $1.40)."

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 $12.49 yesterday.

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