Zacks Investment Research upgraded shares of American Eagle Outfitters, Inc. (AEOS) from UNDERPERFORM to NEUTRAL on December 19, 2013, with a target price of $15.00.
We have upgraded our long-term recommendation on American Eagle to Neutral, based on its store expansion strategies and focus on inventory control that position it favorably for growth. Further, continued momentum in the Denim category and improved merchandise assortments in the women's business segment will likely boost its top-line performance. Simultaneously, we expect the company's cost-saving initiatives and long-term growth strategy to not only provide financial flexibility but also help drive value proposition. However, we hold back our optimism on the stock due to the disappointing third-quarter fiscal 2013 results on the back of weak sales trends and lower merchandise margins. Moreover, the company's conservative guidance justifies our Neutral stance, in light of hurt investor sentiments.
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