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Investing.com - UBS maintained its Buy rating and $19.00 price target on American Eagle Outfitters (NYSE:AEO) on Thursday, citing potential growth from the company’s Aerie brand. According to InvestingPro data, the stock currently trades at an attractive P/E ratio of 9.7x and has maintained dividend payments for 22 consecutive years, showing strong financial stability.
The investment firm expects Aerie to drive "surprising top-line growth" for American Eagle and forecasts a 10% five-year earnings per share compound annual growth rate.
UBS believes this earnings growth trajectory could cause American Eagle’s price-to-earnings ratio to revert back toward its past five-year mean.
The firm noted the current stock price reflects "very negative sentiment" based on conversations with investors, suggesting potential upside if performance improves.
UBS’s recent retail bus tour store visits with management in Chicago on July 9th reinforced the firm’s positive outlook on the company.
In other recent news, American Eagle Outfitters 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, American Eagle Outfitters is moving forward with a $200 million accelerated share buyback program. The company’s annual meeting saw the election of Deborah A. Henretta and Cary D. McMillan as directors, and the appointment of Ernst & Young LLP as the independent accounting firm was ratified. CFRA analysts downgraded the stock from Buy to Hold, citing anticipated challenges in the apparel and footwear market, while UBS maintained a Buy rating with a $19 price target, highlighting potential earnings growth. 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 American Eagle Outfitters is navigating.
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