AEO - American Eagle Outfitters: Downgrade To Hold As I Monitor Progress In Opex Leverage
2024-03-29 04:57:08 ET
Summary
- American Eagle Outfitters stock has risen above my target price, but the risk/reward situation is no longer attractive.
- The stock is trading at an elevated multiple, and the long-term growth targets set by management are too optimistic.
- The company's historical performance suggests that achieving a 10% EBIT margin is unlikely, and more evidence of cost cuts and margin improvement is needed before considering a buy rating.
Summary
Following my coverage of American Eagle Outfitters ( AEO ), for which I recommended a buy rating given the brand’s product positioning seemed to fit the preferences of its targeted demographics (teenagers and young adults) and that its brick-and-mortar strategy is well complemented by a strong online presence, this post is to provide an update on my thoughts on the business and stock....
American Eagle Outfitters: Downgrade To Hold As I Monitor Progress In Opex Leverage