KeyBanc Upgrades Aeropostale, Inc. (ARO) to Buy; Renormalizing Margins

KeyBanc upgraded Aeropostale, Inc. (NYSE: ARO) to Buy with a price target of $20.00.

KeyBanc analyst says, "Since we downgraded ARO to UNDERWEIGHT on November 1, 2010 (and subsequently raised it to HOLD on April 6, 2011), our thesis has been that we found ARO's 17% operating margin unsustainable in the face of stronger competition from Abercrombie & Fitch Co.'s (NYSE: ANF) Hollister division. However, we believe that market share losses may be abating (at least on a unit basis) and that margins may show some sign of floor. Over the medium term, we believe that ARO is capable of a low teens operating margin, which implies an $1.10+ in medium-term earnings power."

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 $14.32 yesterday.

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