American Eagle, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Jonna Kim from TD Cowen maintained a Hold rating on the stock and has a $17.00 price target.
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Jonna Kim has given his Hold rating due to a combination of factors influencing American Eagle’s current market position. The company has shown improvement in sales trends following a weak first quarter, driven by merchandise enhancements and effective marketing campaigns that have successfully attracted customer traffic. However, despite these positive developments, the stock’s current valuation appears to limit further multiple expansion, making it challenging to foresee significant upside potential.
While the recent results have exceeded expectations, particularly with newness at Aerie and AE, and a reduction in promotions, there are uncertainties regarding the sustainability of these improvements. The company’s valuation, approximately 12 times the forward earnings, seems rich, which could constrain further stock price appreciation. Consequently, while there is room for potential upside in the second half of the fiscal year, the current valuation justifies maintaining a Hold rating, even as the price target is raised to $17.
Kim covers the Consumer Cyclical sector, focusing on stocks such as Gap Inc, Bath & Body Works, and American Eagle. According to TipRanks, Kim has an average return of 16.7% and a 39.47% success rate on recommended stocks.
In another report released today, Citi also maintained a Hold rating on the stock with a $15.00 price target.