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American Eagle Raises Outlook; Shares Jump 5%

American lifestyle, clothing, and accessories company American Eagle Outfitters, Inc. (AEO) released its outlook for the fourth-quarter and raised its fiscal year 2023 guidance.

Shares briefly jumped as much as 4.9% on the news, and ended the day up 2.6% at $24.12 on January 11.

Q4 and FY2023 Outlook

AEO said it will achieve Q4 revenue growth between mid-to-high teens over the Q4FY20 base. The growth is aided by strong demand for its offerings and favorable pricing trends.

Moreover, the company said it is well on track to achieve operating margins of $600 million for the full year fiscal 2021, which was its margin and income goal for FY23.

Based on the continued business momentum and operating efficiencies achieved under its “Real Power. Real Growth.” value creation plan, the company updated its FY23 outlook.

For FY23, AEO now expects revenue to be around $5.8 billion and operating income of $800 million, implying an operating margin of 13.5%. The revised revenue includes Aerie revenue of $2.2 billion and American Eagle revenue of $3.6 billion.

CEO Comments

Jay Schottenstein, AEO’s Executive Chairman of the Board and CEO, said, “Aerie cemented another year of industry-leading growth and achieved a substantial inflection in profitability as its powerful brand platform continued to scale. Operational excellence drove solid results amidst external disruptions. We closed out a milestone year for our supply chain, anchored by two key acquisitions, which secured cost efficiencies, locked in key strategic advantages, and created a new platform for future growth.”

Consensus View

The AEO stock has a Moderate Buy consensus rating based on 2 Buys versus 2 Holds. The average American Eagle price target of $36.25 implies 50.3% upside potential to current levels. Shares have gained 7.4% over the past year.

Stock Investors

TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on American Eagle, with 11.3% of portfolios tracked by TipRanks increasing their exposure to AEO stock over the past 30 days.

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