Christopher Nardone, an analyst from Bank of America Securities, reiterated the Hold rating on American Eagle (AEO – Research Report). The associated price target is $21.00.
Geoff Meacham has given his Hold rating due to a combination of factors impacting the performance and outlook of American Eagle’s stock. Notably, American Eagle reported an 8% increase in quarter-to-date sales with both the American Eagle and Aerie brands showing positive growth, leading management to raise its fourth-quarter sales outlook. The company is also anticipating an operating profit higher than previously estimated, factoring in increased sales moderately balanced by higher selling, general, and administrative expenses. This financial momentum is reportedly carrying into early January, prompting upward revisions to the company’s earnings per share estimates for the fourth quarter of 2023 and fiscal year 2024.
Despite the positive holiday sales performance and management’s confidence in gross margin expansion and operating expense leverage for fiscal year 2024, the Hold rating reflects a cautious stance on the sustainability of current sales trends. The company faces an uncertain macroeconomic environment which could impact future sales. Furthermore, the stock’s current valuation at 5.7 times EV/EBITDA and 13.4 times P/E suggests a balanced risk/reward scenario. Meacham’s revised price objective takes into account these factors, along with a market re-rating, leading to a slightly higher but still cautious valuation multiple.
Nardone covers the Consumer Cyclical sector, focusing on stocks such as American Eagle, Carter’s, and Crocs. According to TipRanks, Nardone has an average return of 12.0% and a 60.53% success rate on recommended stocks.
In another report released yesterday, Citi also maintained a Hold rating on the stock with a $23.00 price target.
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American Eagle (AEO) Company Description:
American Eagle Outfitters, Inc. is a multi-brand specialty retailer. It offers an assortment of apparel and accessories for men and women under the American Eagle Outfitters brand, and intimates, apparel and personal care products for women under the Aerie brand. The firm operates stores in the United States, Canada, Mexico, Hong Kong, China and the United Kingdom. It also acquired two emerging brands to complement its existing brands, Tailgate, a vintage sports-inspired apparel brand, and Todd Snyder New York, a premium menswear brand. The company was founded in 1977 and is headquartered in Pittsburgh, PA.
Read More on AEO:
- American Eagle Outfitters (NYSE:AEO) Surges on Strong Holiday Sales Momentum
- American Eagle raises Q4 operating profit view to $130M from $105M-$115M
- American Eagle price target raised to $27 from $24 at UBS
- American Eagle price target raised to $21 from $19 at JPMorgan
- American Eagle price target raised to $26 from $22 at Barclays
