The firm lowered its price target to $17 from $19 on the stock that has increased 35% since December, outpacing its group, which has declined 9% over the same period.
American Eagle Outfitters was the "clear winner" during Black Friday, with a 40% off store-wide discount, the first time in a year that the company's promotions are not less year-over-year, analysts added.
The Pittsburgh-based company will release its fiscal 2015 third quarter results on Wednesday after the market close.
Analysts have forecasted earnings of 34 cents per share on revenue of $924.83 million for the quarter.
Last year, American Eagle Outfitters reported earnings of 22 cents per share on $854.29 million for the quarter ended November 1.
American Eagle Outfitters stock closed at $16.40 on Friday.
Separately, TheStreet Ratings team rates AMERN EAGLE OUTFITTERS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate AMERN EAGLE OUTFITTERS INC (AEO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AEO's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 12.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- AMERN EAGLE OUTFITTERS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, AMERN EAGLE OUTFITTERS INC increased its bottom line by earning $0.46 versus $0.42 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.46).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 472.2% when compared to the same quarter one year prior, rising from $5.81 million to $33.26 million.
- You can view the full analysis from the report here: AEO
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.