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Analysts Recommend ‘Hold’ for American Eagle Outfitters

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Rating synopsis

Ahead of American Eagle Outfitters’ (AEO) upcoming fiscal first-quarter results on May 31, most (53.0%) of the 19 analysts covering the stock recommend “hold,” 42.0% recommend “buy,” and 5.0% recommend “sell.” In the quarter, analysts expect American Eagle Outfitters’ top and bottom lines to grow 5.7% and 37.5%, respectively.

There has been just one price revision for American Eagle stock in the last 30 days, with Suntrust Robinson cutting its target price to $21 from $22 on May 21 and downgrading its rating to “hold” from “buy.” Analysts’ 12-month average target price for the company is $21.28, reflecting a ~6.5% downside based on its May 21 stock price.

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Ratings for peers

  • Of the 16 analysts covering Abercrombie & Fitch (ANF), 44% recommend “hold,” and 25% recommend “buy.” Analysts’ target price for Abercrombie & Fitch is $22.54, implying a 14.0% downside based on its May 21 stock price.
  • Of the 22 analysts covering Urban Outfitters (URBN), 55% recommend “hold,” and 41% recommend “buy.” Analysts’ target price for Urban Outfitters is $41.12, implying a 2.8% downside based on its May 21 stock price.
  • Of the 25 analysts covering Gap (GPS), 80% recommend “hold,” and 8% recommend “buy.” Analysts’ target price for the stock is $34.03, implying a 7.4% upside based on its May 21 price.

Valuation comparison

Forward PE (price-to-earnings) multiples, among the most often used metrics for making investment decisions, are calculated by dividing stock prices by analysts’ earnings estimates for the upcoming four quarters.

As of May 21, American Eagle Outfitters was trading at a 12-month forward PE ratio of 15.7x. Since its fiscal fourth-quarter 2017 results release on March 8, its valuation multiple has increased 22.7%. American Eagle Outfitters was trading at a lower valuation multiple than Abercrombie & Fitch and Urban Outfitters, which were trading at 33.1x and 18.7x, respectively. On the other hand, Gap was trading at ~12.1x, lower than American Eagle Outfitters.

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