Bank Of America Lowers PT On ARO To $22

Bank of America has lowered its price target on Aeropostale Inc. ARO to $22 following weak 1Q results. According to Bank of America, “Aeropostale reported 1Q11 EPS of $0.20, which was in line with our recently lowered estimate and consensus. Guidance for 2Q11 of $0.11-0.16 is significantly below our prior estimate of $0.34. This guidance reflects gross margin pressure from elevated markdowns as the company liquidates spring merchandise ahead of Back to School. We are accordingly reducing our F2011 and F2012 EPS estimate by $0.49 and $0.27 to $1.40 and $1.84, respectively, and reducing our Price Objective to $22 to reflect the lower estimates. Aeropostale has a long way to go in navigating missteps in their assortment and product cost headwinds, but its variable cost structure and strong balance sheet should dull some of the impact of these issues.” Bank of America maintains a Neutral rating on the stock. ARO closed yesterday at $21.34.