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Why American Eagle Stock Was Climbing Today

By Jeremy Bowman – Sep 23, 2021 at 4:43PM

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A bullish analyst note helped push the stock higher.

What happened

Shares of American Eagle Outfitters (AEO 4.10%) were moving higher today after the company got an endorsement from J.P. Morgan.

The stock closed the day up 3.4% after trading as high as 6.1% earlier in the session.

Shoppers at an outdoor mall.

Image source: Getty Images.

So what

J.P. Morgan analyst Matthew Boss reaffirmed his overweight rating on the retail stock this morning and his price target of $42 after hearing comments from management at a recent conference.

American Eagle management said it was on track for 25% compound annual revenue growth from Aerie, its intimates brand. Boss noted strong customer acquisition, an expanding retail presence for Aerie -- which has been one of the brightest stories in brick-and-apparel retail in recent years -- and double-digit growth in categories like swim, casual clothing, and loungewear.

Now what

The retailer has been a strong performer in recent years with even its core American Eagle Outfitters chain holding up well in a difficult environment. In its second-quarter earnings report, the company had already recovered to operate above pre-pandemic levels with an operating margin of 14.1% in the quarter, its highest mark since 2008. Management also raised its guidance for the year to $600 million in operating income and lifted its quarterly dividend payout by 31% to $0.18, rewarding investors.

On Wednesday, the company also announced the launch of a new premium denim, AE77, which has a lower environmental impact, showing its ability to innovate.

With the stock trading at a price-to-earnings ratio of less than 13, it still looks like a smart buy.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

American Eagle Outfitters Stock Quote
American Eagle Outfitters
AEO
$15.99 (4.10%) $0.63
JPMorgan Chase & Stock Quote
JPMorgan Chase &
JPM
$135.16 (-0.79%) $-1.08

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