American Eagle Outfitters Inc (AEO)

[lecorb]

American Eagle Q2 Beats Views; Some Analysts Still On Fence
3:48p ET August 21, 2014 (Benzinga)

American Eagle Outfitters (NYSE: AEO) posted a 70 percent decline in second-quarter earnings, while same-store sales fell seven percent, but it wasn't as bad as Wall Street expected.

The apparel retailer's shares opened sharply higher Thursday and climbed during the day.

"It was enough to fend off fears," Nomura's Simeon A. Siegel said of recent results.

Siegel said he expects cost cutting and improving margins, but wants more information on plans for discounting. Siegel maintained a Neutral rating but raised his target to $12 a share.

Citi's Oliver Chen maintained a Sell rating but was nonetheless "impressed" with the company's second-quarter merchandise margin, inventory control and a slowing rate of decline in same-store sales.

The outlook for lower costs and a four percent dividend yield suggest strong fundamentals for the stock. But Chen wants to see fewer promotions and more consistent traffic before upgrading.

FBR's Susan Anderson said margin expansion in the second half of 2014 "seems achievable" but lower inventory and fewer promotions suggest that improving same-store sales "could be difficult."

Anderson maintained a Market Perform rating and $12 target Monday.

American Eagle recently traded up three percent to $13.38 Less