Wachovia Upgrades American Eagle to 'Outperform'

Analyst Joseph Teklits says the specialty retailer's fall product assortments are more on trend

Wachovia upgraded American Eagle Outfitters (AEOS ) to outperform from market perform.

Analyst Joseph Teklits says the fall product assortments are more on trend, and more tightly merchandised than they have been for at least a year. He says the overall economic and fashion backdrops are improving with payroll upticking, and tax credit checks coming in the mail soon. He sees pent up demand for buying clothes after alack of spending in the first half of the year.

Teklits notes conservative inventory commitments may limit second-half comparisons, and there's a potential to flattish comparisions. Still, comparisons should allow for much higher gross margins year-over-year. He raised the $1.12 fiscal 2004 (Jan.) EPS estimate to $1.19, and raised the $1.30 fiscal 2005 estimate to $1.40.

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