American Eagle Outfitters (AEO) PT Lowered to $17 at CFRA

CFRA analyst Zachary Warring lowered the price target on American Eagle Outfitters (NYSE: AEO) to $17.00 (from $20.00) while maintaining a Buy rating.

The analyst comments "We lower our 12-month target by $3 to $17, based on 11.3x our FY 26 (Jan.) EPS estimate, slightly lower than its three-year average forward P/E multiple of 11.5x, reflecting our view that AEO will continue to operate efficiently in a tough macroeconomic backdrop. We lower our FY 26 EPS by $0.25 to $1.50 and initiate FY 27's at $1.75. AEO posted normalized Q4 EPS of $0.54 vs. $0.61, $0.03 above consensus estimates on revenues of $1.61B vs. $1.68B, $5M above estimates. By brand in Q4, Aerie comparable sales were +6% Y/Y, with American Eagle +1%. Q4 operating margin expanded 50 bps Y/Y to 8.9% due to lower markdowns and inventory discipline. AEO guided for FY 26 revenues to decline low-single-digits, gross margin compression, and operating income between $360M and $375M. AEO announced an additional 50M shares were added to its current share buyback program. Shares trade at the bottom of its 20-year range and at just 6x NTM EPS estimates. We see the current decline as a great opportunity to buy shares."

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