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American Eagle Outfitters to Top Quarterly Views, Remain Cautious Amid Uncertainty, UBS Says

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American Eagle Outfitters to Top Quarterly Views, Remain Cautious Amid Uncertainty, UBS Says

American Eagle Outfitters' (AEO) fiscal first-quarter results are expected to exceed analysts' estimates, though the clothing retailer is expected to remain cautious amid macro uncertainty, UBS Securities said in a note sent Friday.

UBS is projecting quarterly earnings of $0.13 per share for the company, compared with the consensus of $0.11. The brokerage is looking at sales of $1.20 billion for the quarter, which would top Wall Street's $1.18 billion estimate.

The parent of intimate apparel brand Aerie is scheduled to release its first-quarter results on May 28.

"We believe AEO had a decent (first quarter), driven by Aerie's strength and (the American Eagle brand's) continuing improvement," UBS analysts, including Jay Sole, wrote. "However, we think AEO will maintain a conservative stance given elevated macro uncertainty and potential (second-half) cost headwinds."

The company will likely reiterate its fiscal 2026 outlook and guide second-quarter comparable sales in line with the Street's projections, Sole said. Analysts in a FactSet poll are looking for second-quarter same store sales growth of 6.6%.

"We believe the market has a similar view," Sole said. "Therefore we don't expect AEO's (first-quarter) report to meaningfully shift sentiment or change EPS forecasts."

In March, the retailer projected full-year comparable sales to rise by a mid-single-digit in fiscal 2026.

UBS remains bullish on the company's long-term potential, with Aerie seen becoming a $3 billion brand. The brokerage has a buy rating on the stock and a 12-month price target of $35.

"We see Aerie as softlines' most under-appreciated growth brand," Sole said. "We think its sales can increase significantly over the coming years from roughly ($2.1 billion) today."

Price: $15.35, Change: $-0.18, Percent Change: -1.19%

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