Mizuho Securities Remains Neutral on American Eagle Outfitters (AEO) Following Todd Snyder Acquisition Announcement
Mizuho Securities maintained a Neutral rating and $18.00 price target on American Eagle Outfitters (NYSE: AEO) following the announced acquisition of the parent company that owns Tailgate, Todd Snyder. Key executives will remain with the company including the Founder and Creative Director, Todd Snyder, joining AEO as EVP and Jimmy Olsson, joining as VP, who will continue to lead the day-to-day operations of Tailgate and Todd Snyder New York.
Analyst Betty Chen commented, "Although we continue to believe AEO is one of the best positioned teen retailers as evidenced by the BTE 3Q results, we remain cautious of looming difficult compares. Moreover, as the competitive environment steps up promotions entering Holiday amidst challenging traffic, further AUR gains (the main comp and margin drivers TY) in 4Q and FY16 may prove challenging. Thus, while the Tailgate Clothing Company acquisition provides new brands to the portfolio and possibly future avenues of growth, we believe shares are fairly valued at ~15x."
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Shares of American Eagle Outfitters closed at $15.26 yesterday.