- Wedbush Securities analyst Jen Redding calls American Eagle Outfitters (AEO +4.7%) an attractive name at current valuation in the post-COVID recovery era.
- Redding says the firm's data read indicates strong online demand, controlled markdowns and clean inventory into Q2, which is seen positioning the retailer well into the back-to-school season.
- "We continue to view AEO's balance sheet as healthy, considering $417M cash and available-for-sale investments at FY19 year-end, and the proceeds of approximately $389M from the recent convertible unsecured note offering, leaving the company with more than enough cash to sustain through the next 3 years without positive free cash flow, in our opinion."
- "We see AEO as an attractive story backed by multiple growth strategies, unique product offerings, and competitive positioning in the space, and see AEO's blue-chip management team as taking the right steps to drive value in the long term."
- Wedbush has an Outperform rating on AEO and boosted price target of $12.