Broadcom named strategic vendor for Walmart virtualization solutions
On Thursday, Raymond (NSE:RYMD) James reaffirmed its Market Perform rating on American Eagle Outfitters (NYSE:AEO) shares, following the company’s fourth-quarter earnings that surpassed expectations. The fashion retailer reported strong results for revenue, margins, and earnings per share (EPS). According to InvestingPro data, the company maintains solid profitability with a gross margin of 39.2% and has demonstrated consistent financial performance, remaining profitable over the last twelve months. However, Raymond James analyst Rick Patel noted that the company issued guidance for the first quarter and full year of 2025 that fell below consensus expectations, covering revenue, gross margin (GM), and earnings before interest and taxes (EBIT).
Despite the positive performance in the fourth quarter, American Eagle faces challenges in the current quarter-to-date. Lower customer traffic, influenced by wavering consumer confidence and adverse weather conditions, has put pressure on sales. This pressure is reflected in the stock’s recent performance, with InvestingPro data showing a significant 41.3% decline over the past six months. However, the company maintains strong liquidity with a current ratio of 1.57, indicating its ability to meet short-term obligations. Patel pointed out that while there are areas of strategic progress, such as growth in denim sales, increased penetration in tops, quarter-over-quarter improvement in men’s apparel, and momentum at Aerie for soft-apparel and activewear, the company’s stock is expected to remain range bound until it demonstrates consistent revenue and EPS growth.
American Eagle is considered a value stock, trading at approximately 7 times the projected earnings for fiscal year 2026, compared to its historical average of 11.5 times. The company’s focus on cost control and diversifying its sourcing strategy to reduce tariff risks is seen as a positive step that could help mitigate the impact of lower revenue on profit margins. InvestingPro analysis suggests the stock is currently undervalued, with additional metrics and insights available to subscribers. Notably, the company has maintained dividend payments for 22 consecutive years, currently offering a 4.37% yield.
Looking forward, Patel mentioned that the guidance suggests an improved outlook for the second half of the year as certain headwinds are expected to subside. Nonetheless, the analyst maintained a neutral stance, awaiting further evidence of progress. Correspondingly, Raymond James adjusted its estimates for American Eagle’s fiscal years 2025 and 2026. For deeper insights into AEO’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence. The firm now expects revenue to change by -1.7% and +2.7% (previously +2.9% and +3.0%) and EPS to be $1.50 and $1.69 (down from $1.79 and $1.99 prior), respectively.
In other recent news, American Eagle Outfitters reported its first-quarter 2025 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $0.54 against the forecasted $0.51. Revenue met expectations at $1.6 billion. Despite these positive results, the company anticipates a slight revenue decline for the full year of 2025. Jefferies, Citi, and Barclays (LON:BARC) analysts have all adjusted their price targets for American Eagle Outfitters, reflecting varying degrees of caution. Jefferies lowered its target to $13 while maintaining a Hold rating, citing a slower start to the year. Citi adjusted its target to $12, maintaining a Buy rating due to challenges like macroeconomic volatility and competitive pressures. Barclays downgraded the stock to Underweight, cutting its target to $10, highlighting issues like declining mall traffic and increased promotions. These recent developments indicate that American Eagle Outfitters faces a complex landscape as it navigates the current retail environment.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.