American Eagle Outfitters (AEO) Punished After Not Raising Q3 Guidance; Analyst Says Buy the Weakness

Investors in American Eagle Outfitters, Inc. (NYSE: AEO) may be scratching their head Tuesday to find the stock down 6 percent despite the company saying that Q3 was tracking in line and also guiding 2012 sales of $3.44, a tick higher than the Street.

Analysts at Wells Fargo believe the sell-off is due to the fact that the company didn't not at least guide to the high end or raise Q3 EPS guidance. However, they think the sell-off is unjustified.

"We would be buyers on weakness as we believe AEO's sales growth and new store opening targets could drive upside to our model, and we continue to believe that AEO's differentiated on-trend product assortment will continue to drive market share gains."

The firm reiterated an Overweight rating.

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