Oppenheimer Reiterates Outperform and PT of $27 on Aeropostale

Oppenheimer reiterated its Outperform rating on Aeropostale ARO. At the same time, Oppenheimer left its price target unchanged at $27 after Aeropostale posted Q1 results in line with its expectations. In a research report published today, Oppenheimer states, "ARO reported FY1Q11 EPS of $0.20, in line with our/consensus of $0.20/$0.21. Revenues rose 1.2% to $469.2M on a (7)% comp (vs. 8% ly). UPT, transactions and AUR were +9%, -4%, -11%, respectively. GM declined 1000 bps to 29.1% (-740 bps merchandise margin). SG&A was flat at 23.2%. While 1Q results and guidance ($0.11-0.16 vs. consensus of $0.28) are clearly disappointing, we believe aggressive markdowns will result in clean BTS inventories. When combined with stringent expense controls, reduced units and new assortments, there should be a level of 2H relief. The great unknowns are the promotional landscape and health of its lower-income consumer. Currently, we believe the risk/reward is favorable for those with a longer-term horizon. Reiterate Outperform." On Thursday, Aeropostale lost 0.51% of its value to close the day at $21.34. Its shares tumbled in today's pre-market trading, however, losing 10.68% to trade at $19.06.