American Eagle Outfitters Inc (AEO)

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S&P CAPITAL IQ KEEPS STRONG SELL OPINION ON SHARES OF AMERICAN EAGLE OUTFITTERS
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11:29 hs 8/21/2014 S&P Capital IQ
We see some progress as AEO repositions its fashion assortments for teens, amid a streamlining of its North America stores base, and a new CEO search. Our 12-month target price is up $2 to $11 (3.8% dividend yield), on FY 16E P/E of 14.3X (vs. 10% long-term EPS growth), a modest discount to peers. We raised FY 15 (Jan.) and FY 16 EPS estimates by $0.03 and $0.02 to $0.58 and $0.77. Jul-Q EPS is $0.03, vs. $0.10, $0.03 above our estimate. Q2 sales and same-store sales fell 2% and 7% (the latter seen also down mid-single digit in Q3), as EBIT margins contracted 240 basis points. Less