American Eagle Outfitters (NYSE:AEO) stock reached a new 52-week high after the retailer reported strong third-quarter results and signaled a sharp demand rebound heading into the holiday season.
The company reported better-than-expected sales and earnings and said momentum strengthened in the early fourth quarter, powered by record Thanksgiving weekend traffic and surging growth at Aerie and Offline.
Analysts raised their price forecasts as management pointed to a “significant trend change” across merchandising, marketing, and operations.
Also Read: American Eagle Stock Soars On Q3 Earnings: Why Shares Are Taking Flight
Analyst Upgrades and Forecast Revisions
Wall Street analysts echoed the improved tone after the report.
Telsey Advisory Group’s Dana Telsey maintained a Market Perform rating and raised her price forecast to $25 from $18.
JPMorgan’s Matthew Boss upgraded the stock to Neutral from Underweight and lifted his forecast to $20 from $14.
Barclays’ Adrienne Yih kept an Underweight rating while increasing her forecast to $20 from $14.
The retailer reported third-quarter results after Tuesday’s close, posting revenue of $1.36 billion versus the $1.32 billion estimate cited, while adjusted EPS of 53 cents topped expectations of 44 cents.
Management described a significant trend change across the business, attributing the improvement to decisive steps across merchandising, marketing, and operations.
Total revenue increased 6% year over year, driven by comparable sales growth, with Aerie comps rising 11% and American Eagle comps up 1%.
Margins reflected tariff pressure. Gross margin was 40.5%, down 40 basis points, and the company cited a $20 million net tariff impact in the quarter. Inventory ended at $891 million, up 11%, with the company noting the increase included the impact of tariffs.
Outlook
Looking ahead, American Eagle raised fourth-quarter operating income guidance to $155 million to $160 million on expected comparable sales growth of 8% to 9%, up from prior guidance of $125 million to $130 million tied to low-single-digit comps.
The company also lifted full-year adjusted operating income guidance to $303 million to $308 million and said it expects a net tariff impact of about $50 million in the fourth quarter and $70 million for fiscal 2025.
AEO Price Action: American Eagle Outfitters shares were up 13.30% at $23.60 during premarket trading on Wednesday. The stock is trading at a new 52-week high, according to Benzinga Pro data.
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