NEW YORK (TheStreet) -- American Eagle Outfitters (AEO) - Get Report stock is gaining 1.87% to $16.26 in morning trading Thursday after Barclays increased its price target to $15 from $11, while maintaining its "equal weight" rating. 

"While we are encouraged by the gradual rebuild in margins and improved comp sales trajectory, we look for a sustained improvement in these trends in order to grow more constructive on the name, particularly as the company faces more challenging compares in the back half of the year," Barclays analysts said.  

Gross margin improved to 35.1%, led by a reduction in markdowns, the firm said, adding that the apparel retailer did not anniversary 35 days of store-wide promotions from last year, as sales flowed through at a healthier rate year over year. 

"In addition to strength in bottoms, trends in tops are also showing positive traction, which we note was a drag on the business in prior periods," analysts said.

Barclays increased their 2015 earnings estimates to 85 cents from 80 cents per share, and introduced their 2016 earnings estimates of 95 cents per share.

Separately, TheStreet Ratings team rates AMERN EAGLE OUTFITTERS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMERN EAGLE OUTFITTERS INC (AEO) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• Net operating cash flow has increased to $105.19 million or 27.17% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.79%.
• 36.93% is the gross profit margin for AMERN EAGLE OUTFITTERS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.05% trails the industry average.
• AEO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that AEO's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.
• In its most recent trading session, AEO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
• Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, AMERN EAGLE OUTFITTERS INC's return on equity significantly trails that of both the industry average and the S&P 500.
• You can view the full analysis from the report here: AEO Ratings Report