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Wunderlich: American Eagle Is Leading The Transformation

Luke Jacobi

Wunderlich weighed in on American Eagle’s (NYSE: AEO) turnaround plan in a research report that started the stock at Hold with an $11 price target.

Although shares are down 33 percent over the past year, American Eagle has fared better than most teen retailers in the transition from logo to fashion sales.

Uncertainty with management is one of the first concerns raised by analyst Eric Beder. The company has been stuck with an interim CEO since January 2014 and “remaining management is nearing retirement.”

With significant changes needed, Wunderlich said it will stay on the sidelines until a CEO is in place to guide the company.

Related Link: Wunderlich: Aeropostale 'Weathering The Storm'

However, not all is bad, according to Beder. Of the logo-based brands, (Aeropostale, Abercrombie & Fitch), American Eagle is, “probably the farthest along in transferring away from logo-driven looks, especially for women.”

The transformation includes a push in denim, screen tees and polos.

The research report also comments that the company is focusing less on standalone stores and on international expansion, which may be effective.

Shares of American Eagle were last trading at $11.23, 2.1 percent higher than Wunderlich’s price target.

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