Nomura Securities Upgrades American Eagle Outfitters (AEO) to Buy; New CEO, New Approach

Nomura Securities upgraded American Eagle Outfitters (NYSE: AEO) from Neutral to Buy, price target raised from $13 to $20.

Analyst, Paul Lejuez, said, "AEO has had its challenges over the past several yrs and new CEO Robert Hanson is addressing these challenges with a focus on ROIC. AEO will shrink the core fleet (and only open in outlet locations), they will halt growth of aerie and kids stores, and they will look to exit some aerie stores. This is a big and positive change. We are raising our F12E from $1.01 to $1.18. We believe AEO can beat cons EPS of $1.06. Our new PT of $20 represents 6.5x/6.0x our F12E/F13E EBITDA, below the softlines group median of 8.1x/7.6x. With an 14% est. FCF yield and trading at less than 5x our F12E EBITDA, the risk/reward looks highly favorable."

For an analyst ratings summary and ratings history on American Eagle Outfitters click here. For more ratings news on American Eagle Outfitters click here.

Shares of American Eagle Outfitters closed at $15.54 yesterday.

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