J.P. Morgan Comments on Aeropostale (ARO)

J.P. Morgan released a report on the retailer Aeropostale ARO earlier. In the report, J.P. Morgan expressed mixed sentiments about the outlook for the company. J.P. Morgan writes, “ARO's operating margins are falling from record highs, with 1Q guidance embedding almost 1,000 bps of margin contraction. Part of the miss is self-inflected, and part is the direct result of the competitive landscape, with Hollister finally gaining market share in the teen space after three years of market share losses. Demographics in this space are becoming less favorable, with the number of 14-17 year olds on the decline in the last few years and already an expectation that this will continue through 2015. At the same time, there is SG&A and buyback opportunity to cushion EPS for the next few quarters, and every time there is LBO speculation in the space, the stock should have some upside.” J.P. Morgan retains a Neutral rating on Aeropostale and a price target of $24.00. The stock fell sharply yesterday, down 15.72% to close at $21.29.