Goldman Discusses American Eagle Earnings (AEO)

Goldman Sachs has a research report on American Eagle Outfitters AEO after the teen retailer reported earnings. It has a Neutral rating and a $17 price target on shares. In a note sent to investors, Goldman writes, "We are encouraged by the recent signs of stability in AEO's business trends. After a very weak 2Q where both sales and margin declined against easy compares, comps turned positive again in 3Q and merchandise margin was up 90 bp despite aggressive peer promotions. While we believe the stock is priced for the current stable trend, there is still significant opportunity in sales and margin relative to historical results. The key question is whether management can turn this quarter's stability into more meaningful sales and margin expansion going forward." Shares of AEO gained 44 cents yesterday to close at $16.29, a gain of nearly 3%.