American Eagle Analysts Bullish On Aerie Inflection, Brand Recovery

American Eagle Outfitters (NYSE:AEO) shares are trading higher after the company reported better-than-expected third-quarter results on Tuesday.

• AEO is reaching significant price levels. Get the details here.

Earnings Snapshot

American Eagle reported third-quarter revenue of $1.36 billion, beating analyst estimates of $1.32 billion, according to Benzinga Pro. The company reported third-quarter adjusted earnings of 53 cents per share, beating estimates of 44 cents per share.

American Eagle raised its fourth-quarter operating income guidance to a range of $155 million to $160 million, citing strong sales trends. Comparable sales are expected to climb 8% to 9% on a year-over-year basis in the fourth quarter.

Also Read: This American Eagle Analyst Is No Longer Bearish; Here Are Top 5 Upgrades For Wednesday

Analysts raised their price forecasts as management pointed to a "significant trend change" across merchandising, marketing and operations.

Rating Upgrade On Aerie Inflection

JPMorgan's Matthew Boss upgraded the stock to Neutral from Underweight and lifted his price target to $20 from $14.

The analyst expects revenue growth to stabilize around +3% through FY26/27 post third-quarter turnaround for the AE and Aerie brands.

The analyst notes that the turnaround was driven by improved product and marketing after Spring/Summer 2025 assortment challenges.

Boss writes that, however, operating margins remain roughly 100 basis points below pre-COVID-19 pandemic levels, and competitive pressures may limit further margin gains.

The analyst raised the adjusted EPS estimate to $1.36 (from $1.16 earlier versus Street view of $1.14) for 2025 and $1.60 (from $1.29 versus consensus of $1.44) for 2026.

Boss sees 2027 adjusted EPS of $1.64 (versus street view of $1.56).

Robust Momentum As Holiday Season Approaches

Telsey Advisory Group's Dana Telsey maintained a Market Perform rating and raised her price target to $25 from $18.

The analyst writes that the company posted strong results, confirming early signs of recovery seen in the second quarter.

Aerie comps grew double-digits for the first time since the fourth quarter of 2023, while AE comps returned to positive growth, driving record revenue growth, adds the analyst.

Telsey says management appears to have successfully addressed earlier operational and assortment challenges, supported by impactful marketing that boosted brand engagement heading into the holiday season, adds the analyst.

However, the analyst writes that while AEO has historically performed well during peak periods, sustaining growth in slower periods remains a challenge.

Finally, Telsey notes that although American Eagle comps turned positive in the first quarter, the brand still trails Aerie significantly, and its path to sustained improvement remains unclear.

Consequently, the analyst now projects FY25 total revenue of $5.47 billion (versus the prior $5.33 billion estimate) and EPS of $1.33 (versus $1.13 earlier). Meanwhile, Telsey raised FY26 EPS estimate to $1.54 from $1.40.

AEO Price Action: American Eagle Outfitters shares are up 14.69% at $23.89 at publication on Wednesday.

Read Next:

• Celebrity Relay: Sweeney Hands Off To Stewart As American Eagle Tries To Hold Its Momentum

Photo: Shutterstock