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S&P: Still Accumulate Aeropostale

Aeropostale (ARO): Reiterates 4 STARS (accumulate)

Analyst: Marie Driscoll, CFA

Aeropostale reported a 6.2% August same-store sales increase, in line with our estimate but missing the 10.6% Street forecast. Our fiscal 2005 (ending January) estimate remains $1.47, vs. 93 cents a year ago. Management believes the late Labor Day cost the company about 500 basis points of comparable-store sales growth. The shares were down about 7% in after-hours trading on Sept. 1. In our view, Aeropostale continues to have ample opportunity to capture market share via geographic expansion, the maturing of its store base, greater share of wallet and ancillary product categories. Our 12-month target price remains $36.

Men's Wearhouse (MW): Reiterates 3 STARS (hold)

Analyst: Marie Driscoll, CFA

Men's Wearhouse reported better-than-expected August sales, up 14% in total and 9% on a comparable-store basis. Management believes the conversion of the company's 74 K&G stores to a seven day a week operation positively impacted comparisons. In our view, we see the company benefiting from the trend toward "dressy casual" and work attire that is driving men to add to their wardrobe. With an estimated 20% share of the men's suit market, we view Men's Wearhouse as mature and reliant on new retail concepts or new markets as the foundation for potential future growth. Our 12-month target price remains $31.

Station Casinos (STN): Reiterates 3 STARS (hold)

Analyst: Markos Kaminis

We are increasing our forecast for food costs through 2004 and 2005. Due to Station's planned expansion, we also believe that room costs could temporarily rise as a percentage of revenue, impacting gross margins in 2005. We are reducing our 2004 EPS estimate by 10 cents to $1.83, and 2005's by 9 cents to $2.18, including development costs. With our forecast for EPS growth over the next three years now reduced to 18% from 20%, and 2005 free cash flow expected to be lower than our previous projection, we are reducing our 12-month target price to $46 from $50.

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