American Eagle Outfitters: Aerie-Led Momentum Balanced by Core Brand Risks Justifies Hold Rating

TD Cowen analyst Jonna Kim has maintained their neutral stance on AEO stock, giving a Hold rating yesterday.

Jonna Kim has given his Hold rating due to a combination of factors around American Eagle’s balanced risk‑reward profile. On the positive side, she sees strong and broad-based momentum at Aerie, supported by robust digital growth, successful product categories like sleep, intimates, and OFFLINE, and relatively easy sales comparisons in the first half of FY26 that should help sustain double-digit gains. She also notes that the company plans to modestly increase marketing investment as a percentage of sales, which should further support brand awareness and customer acquisition, particularly given the high overlap between Aerie and AE shoppers.

However, Kim also highlights several constraints that temper the upside and justify a Hold rather than a more bullish stance. Aerie’s sales comparisons become significantly more challenging in the back half of FY26, raising the risk that current momentum could moderate given the brand’s historically volatile performance. In addition, while Aerie is performing well, the core American Eagle brand still has meaningful room for improvement, and the sustainability of the supportive denim trend into FY26 remains a key variable. Taken together, these positives and uncertainties lead Kim to conclude that the current valuation appropriately reflects the near-term growth prospects, warranting a Hold rating.

Kim covers the Consumer Cyclical sector, focusing on stocks such as American Eagle, JJill, and SharkNinja, Inc.. According to TipRanks, Kim has an average return of 13.6% and a 48.84% success rate on recommended stocks.

In another report released yesterday, Telsey Advisory also maintained a Hold rating on the stock with a $28.00 price target.