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Why American Eagle Outfitters Stock Is Higher Today

What happened 

Shares of American Eagle Outfitters (NYSE:AEO) were trading higher on Thursday. The company on Tuesday said that it will hit its 2023 financial targets ahead of schedule; Wall Street analysts have since responded with bullish notes, while expressing some near-term concerns.

As of 2 p.m. ET, American Eagle’s shares were up about 4.7% from Wednesday’s closing price.

So what

In a new note on Thursday, Barclays analyst Adrienne Yih reiterated the bank’s overweight rating on American Eagle’s shares, while trimming its price target from $46 to $38. 

Yih remains bullish on the stock, but she has some near-term concerns. She wrote that fourth-quarter results from other retailers and macro factors including surging cases of the omicron variant of the coronavirus have increased the likelihood of a slower start to 2022 for American Eagle and other apparel retailers, in her view. 

Specifically, with respect to American Eagle, Yih thinks that a lack of promotions and clearance sale items could weigh on its January sales and store traffic. 

Person shopping in clothing store is looking at phone.

Image source: Getty Images.

Separately but similarly, J.P. Morgan analyst Matthew Boss in a Wednesday note maintained his bank’s overweight rating on American Eagle’s stock while trimming the bank’s price target to $37 from $42.

Clearly, investors in retail stocks were more impressed with the long-term bullishness than with the analysts’ near-term concerns on Thursday. 

Now what

The company itself was upbeat about its January prospects on Tuesday. It said that for its fiscal fourth quarter, which will end on Jan. 31, it expects revenue to be up from a year ago by a percentage in the “mid-to-high-teens,” and up from the fourth quarter of fiscal 2019 by a percentage in the “mid-teens.” 

It also expects to deliver operating income between $90 million and $100 million for the quarter, despite a sharp increase in transportation costs due to pandemic-related disruptions, it said. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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