Morgan Stanley upgrades American Eagle Outfitters (AEOS) to strong buy from outperform.
Analyst Robert Ohmes says AEOS stock looks attractive on the basis of its strong brand position, sustainable unit growth, healthy free cash flow generation, and attractive return on invested capital. He expects less negative comps after December, and believes the valuation is compelling.
Ohmes sees EPS of $1.45 in FY 02 (Jan.) and $1.70 in FY 03. He also raises his price target to $38.