Piper Jaffray Raises Price Target On American Eagle (AEO)

Piper Jaffray is raising the price target on American Eagle Outfitters AEO to $17, but is keeping its Neutral rating on shares after the company reported earnings. In a note sent to clients, Piper Jaffray writes, "We maintain our Neutral rating on AEO shares, but believe improved FQ3 results possibly indicates an inflection point for the company. Most telling, we believe, was positive AURs and increased conversions in the highly promotional teen space. We believe that customers are not shying away from the company's slightly higher price points, that the brand's fashions remain on-trend, and that the company's new allocation systems are better aligning stock-to-sales. We hold to our Neutral rating as we watch the competitive Holiday season unfold, but are increasing EPS estimates in FQ4 and FY11 and moving our price target from $16 to $17 based on a 15x (formerly 14x) FY12E EPS of $1.14." Shares of AEO gained 44 cents yesterday to close at $16.29, a gain of nearly 3%.