American Eagle Outfitters "market perform," estimates reduced

08/22/07 - Morgan Keegan

NEW YORK, August 22 (newratings.com) - Analysts at Morgan Keegan maintain their "market perform" rating on American Eagle Outfitters Inc (AEO), while reducing their estimates for the company.

In a research note published yesterday, the analysts mention that the company has issued its EPS guidance for 3Q07 at $0.47-$0.48, representing a further decline in quarterly EPS growth. Given Concept 3’s bright prospects and a 7.5% FCF yield, along with American Eagle Outfitters’ ambitious share buyback efforts, there is limited downside to the company’s share price, the analysts say. There is increased investor concern over the maintainability of the 19.5% operating margins, as indicated by the reduced estimates, Morgan Keegan adds. The EPS estimates for FY07 and FY08 have been reduced from $1.96 to $1.95 and from $2.27 to $2.18, respectively.