Goldman Sachs upgraded American Eagle (AEOS) to outperform from in-line.
Analyst Thomas Filandro says his upgrade is based on solid momentum in women's clothing, easing comparisons, and an improved spring inventory positioning; he views the risk/reward profile as compelling. Although women's clothing continued its positive sales performance throughout the holiday season, it simply wasn't enough to offset significant weakness in men's clothing.
Based on lower overall sales and margin expectations, Filandro is reducing the $1.50 fiscal 2003 (Jan.) earnings per share estimate to $1.42. He says American Eagle is trading at 9.7 times his fiscal 2003 estimate -- a 48% discount to its five-year average forward price-earnings multiple of 18.6.