UBS Keeps Buy Rating for American Eagle Outfitters with $19 Price Target

UBS has reiterated its "Buy" rating for American Eagle Outfitters (AEO) with a price target of $19. The investment firm believes the company's Aerie brand can drive future growth, projecting 10% EPS CAGR over five years. UBS expects the stock's P/E ratio to return to its past five-year mean and notes that the market is being overly negative about AEO. The firm recently attended retail bus tour store visits with AEO management in Chicago, reinforcing its positive stance on the company.

UBS has maintained its "Buy" rating for American Eagle Outfitters (AEO) with a price target of $19, reflecting the investment firm's optimism about the company's Aerie brand. According to UBS, the Aerie brand is poised to drive "surprising top-line growth" for AEO, with the firm forecasting a 10% five-year earnings per share compound annual growth rate (EPS CAGR) [1].

The stock currently trades at an attractive price-to-earnings (P/E) ratio of 9.7x, and AEO has maintained dividend payments for 22 consecutive years, demonstrating strong financial stability. UBS believes that the company's earnings growth trajectory could cause its P/E ratio to revert back toward its past five-year mean.

UBS's recent retail bus tour store visits with AEO management in Chicago on July 9th reinforced the firm's positive outlook on the company. The firm noted that the current stock price reflects "very negative sentiment" among investors, suggesting potential upside if performance improves.

In other recent news, AEO reported a first-quarter adjusted loss per share of $0.29, missing analyst forecasts, while revenue slightly exceeded expectations at $1.1 billion. The company faced a 5% decline in consolidated revenue year-over-year, with comparable sales dropping by 3%. Despite these challenges, AEO is moving forward with a $200 million accelerated share buyback program.

CFRA analysts downgraded the stock from Buy to Hold, citing anticipated challenges in the apparel and footwear market. Citi analyst Paul Lejuez adjusted the price target to $11, maintaining a Neutral stance due to ongoing inventory challenges and competitive pressures. These developments reflect the current market conditions and strategic decisions AEO is navigating.

References:
[1] https://in.investing.com/news/analyst-ratings/american-eagle-stock-price-target-maintained-at-19-by-ubs-on-aerie-growth-93CH-4907187
[2] https://www.investing.com/news/analyst-ratings/american-eagle-stock-price-target-maintained-at-19-by-ubs-on-aerie-growth-93CH-4130250