UPDATE: Oppenheimer Lowering Price Target On Aeropostale

Oppenheimer & Co. is out with a research report on Aeropostale Inc. ARO and is lowering its price target on shares to $14 from $16, but is keeping its Overweight rating on shares. In a note to clients, Oppenheimer & Co. writes, "ARO reported FY2Q11 EPS of $(0.02), in line with our estimate, but ahead of consensus of $(0.03). Previously reported revenues decreased 5% to $468.2M on a (14)% comp (vs. 4% LY). UPT/ transactions/AUR were +6%/-4%/-16%, respectively. GM declined 1300 bps to 24.4% (-940 bps merchandise margin). SG&A increased 30 bps to 23.2%. While 2Q results and 3Q guidance ($0.09-$0.15 vs. consensus of $0.32) clearly disappointed, we believe aggressive markdowns and conservative planning will result in cleaner holiday inventories. When combined with stringent expense controls and improved assortments, there should be a level of relief in F12. The unknowns are the promotional landscape and the health of ARO's lower-income consumer. We believe the risk/reward is with a longer-term horizon. Reiterate Outperform." Shares of ARO are down $1.49 in pre-market trading to $11.00.