Shares of American Eagle Outfitters Inc (NYSE:AEO) jumped in after-hours trading on Wednesday, following the release of the company’s second-quarter results.
While stronger gross margins drove the company’s upbeat results, its topline has accelerated into the current quarter, according to Telsey Advisory Group.
The American Eagle Outfitters Analyst: Dana Telsey maintained a Market Perform rating, while raising the price target from $15 to $19.
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The American Eagle Outfitters Thesis: The company’s gross margin expanded by 680 basis points to 37.7% in the second quarter, “driven by better merchandise margins given lower markdowns, lower transportation and product costs, as well as lower delivery, distribution, and warehousing costs,” Telsey said.
“Business picked up in June and then accelerated in July, as the company was able to chase into demand,” the analyst wrote. “AE saw strong demand around peak shopping periods and nice results across genders.”
American Eagle Outfitters raised its full-year guidance, given the stronger-than-anticipated second-quarter results and continued momentum quarter-to-date, Telsey explained.
AEO Price Action: Shares of American Eagle Outfitters had declined by 1.57% to $16.93 at the time of publication Thursday.
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