) to strong buy.
On Thursday the company posted 3.9% lower June consolidated comp sales, and cut the second quarter earnings per share guidance.
Analyst Richard Jaffe says results are in line. He says he thinks fashion misses in women's assortment, and higher than planned promotions contributed to the drop in comp sales. Still, he says with American Eagle in the wake of a fashion misstep this Spring, now is the optimal time to buy.
The upgrade is based on easy comps, a likely turnaround of Thrifty's/Blue Notes operations, lean inventory management, and the likely perpetuation of a strong denim trend similar to last year for back to school. He cut his $0.20 second quarter earnings per share estimate to $0.18, and cut the $1.63 2002 to $1.60. He sees $1.90 EPS for 2003 and cut the $36 target to $30.