American Eagle Outfitters "buy," target price reduced

08/18/05 - Wedbush Morgan Securities

NEW YORK, August 18 (newratings.com) - Analysts at Wedbush Morgan reiterate their "buy" rating on American Eagle Outfitters (AEOS), while reducing their estimates for the company. The 12-month target price has been reduced from $36 to $33.

In a research note published yesterday, the analysts mention that the company reported its 2Q EPS, including benefits from interest income and tax, in-line with the estimates and ahead of the consensus. American Eagle Outfitters’ interest income has increased substantially and the company is likely to focus on managing store payroll in 2H05 in order to boost its earnings, the analysts say. The target price has been reduced to reflect peaking sales productivity and tough comps and margin comparisons, Wedbush Morgan adds. The EPS estimates for 2005 and 2006 have been reduced from $2.00 to $1.99 and from $2.19 to $2.17, respectively.