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Fly News Breaks for February 18, 2020
AEO, PBF, WD, EMR, KTB
Feb 18, 2020 | 10:15 EDT
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. PBF Energy (PBF) downgraded to Sell from Neutral at Goldman Sachs with analyst Neil Mehta saying while the company's Q4 results came in ahead of expectations, he is concerned about PBF's lack of free cash flow generation power through the cycle. 2. Kontoor Brands (KTB) downgraded to Hold from Buy at Stifel with analyst Jim Duffy saying the coronavirus will weigh on Lee brand sales in China and impede the planned Q1 Wrangler China launch. 3. Walker & Dunlop (WD) downgraded to Market Perform from Outperform at JMP Securities with analyst Steven Delaney saying the rating change is not a reflection of the company's past or expected performance, but after a 15.3% run-up in the stock price since its Q4 earnings beat and dividend hike earlier this month, he sees shares as "fairly valued." 4. American Eagle (AEO) downgraded to Market Perform from Outperform at Cowen with analyst Oliver Chen saying he sees downside risk to the company's sales, traffic, and promotions. 5. Emerson (EMR) downgraded to Sector Perform from Outperform at RBC Capital with analyst Deane Dray saying the discussion at the company's analyst meeting last week "postpones" his bull case calling for a breakup, with Emerson now entering a "cost reset" mode that focuses more on restructuring than growth strategy. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
News For PBF;KTB;WD;AEO;EMR From the Last 2 Days
AEO
Jun 4, 2020 | 10:06 EDT
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. Tyson Foods (TSN) upgraded to Outperform from Market Perform at Bernstein with analyst Alexia Howard saying as livestock slaughter remains meaningfully below the year-ago level, the industry average pork and beef packer margins have reached record levels. 2. Oshkosh (OSK) upgraded to Conviction Buy from Buy at Goldman Sachs with analyst Jerry Revich saying he believes access equipment orders and backlogs are approaching trough, and that construction equipment capacity utilization has inflected off April lows and is set to improve further amid limited supply. 3. Wells Fargo (WFC) upgraded to Buy from Hold at Deutsche Bank. 4. American Eagle (AEO) upgraded to Equal Weight from Underweight at Morgan Stanley with analyst Kimberly Greenberger saying she believes renewed inventory and operating expense discipline could lead to upside for its EBIT margin and thinks the company's liquidity "appears appropriate." 5. SeaWorld (SEAS) upgraded to Buy from Neutral at Citi with analyst Jason Bazinet saying he expects "ongoing challenges in a post-COVID environment" and models 2022 attendance 5% below 2019 levels. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
AEO
Jun 4, 2020 | 07:39 EDT
Deutsche Bank analyst Tiffany Kanaga raised the firm's price target on American Eagle to $15 from $13 and keeps a Buy rating on the shares following the company's Q1 results. American Eagle has re-established itself as a "winner in the mall" with "outstanding" quarter-to-date trends thus far in Q2, Kanaga tells investors in a research note. Management is seeing 95% productivity in re-opened stores with less promotional activity than planned, adds the analyst. Kanaga expects new customer acquisition and market share gains for both brands to drive the 2021 earnings rebound to levels only 12% below 2019, "which would represent a large relative success within specialty retail."
AEO
Jun 4, 2020 | 07:16 EDT
As previously reported, Morgan Stanley analyst Kimberly Greenberger upgraded American Eagle to Equal Weight from Underweight with a price target of $11, up from $9, after the company reported Q2-to-date brick and mortar and digital volumes that exceeded expectations. She believes renewed inventory and operating expense discipline could lead to upside for its EBIT margin and thinks the company's liquidity "appears appropriate," Greenberger added.
AEO
Jun 4, 2020 | 06:31 EDT
Barclays analyst Adrienne Yih raised the firm's price target on American Eagle to $14 from $10 and keeps an Equal Weight rating on the shares following the company's Q1 results. The company's reopened stores thus far in Q2 are at 95% productivity, a "notably faster-than-expected recovery," driven by continued strength of Aerie, an improving AE brand, and digital performance that has not waned even as stores reopened, Yih tells investors in a research note.
KTB
Jun 3, 2020 | 09:47 EDT
Kontoor Brands is up 15.0%, or $2.55 to $19.59.
AEO
Jun 3, 2020 | 08:14 EDT
American Eagle reported in its Q1 earnings release, "Total ending inventory at cost decreased $34 million or 8% to $422 million. The company continues to clear through AE spring and summer merchandise to position both brands for new back-to-school collections in late July. Inventory optimization initiatives currently being implemented will streamline assortments, provide greater alignment of inventory to sales plans and better utilize supply chain strengths to chase product demand."
AEO
Jun 3, 2020 | 08:11 EDT
American Eagle previously announced that the company was deferring its Q1 dividend. In its Q1 earnings release, the company said, "The company has taken the following additional actions in response to the COVID-19 crisis: Suspending its share repurchase program, deferring payment of the first quarter 2020 cash dividend and suspending its second quarter 2020 cash dividend; Temporarily furloughing store, field and corporate associates beginning April 5, while continuing to pay health insurance premiums for all furloughed associates; Cutting inventory receipts to align with lower demand due to store closures; Reducing operating expenses, including suspending merit increases for associates, implementing a hiring freeze and other cost saving initiatives; Reducing capital expenditures across stores, information technology and other projects; Borrowing $330 million from its $400 million revolving credit facility and issuing $415 million convertible notes due 2025."
AEO
Jun 3, 2020 | 08:06 EDT
Reports Q1 revenue $552M, consensus $634.26M. American Eagle said in its Q1 earnings release, "By brand, American Eagle revenue decreased 45%, following a 5% increase last year. Aerie's revenue decreased 2%, following a 28% increase last year. The company's digital demand, as measured by ordered sales, increased 33%. Aerie rose 75% and AE increased 15%. First quarter digital reported revenue was up 9%, reflecting strong demand, partly offset by temporary delays in fulfillment that led to higher than normal DC backlogs. The company has since reduced backlogs from mid-April peaks. In the first quarter of 2020, the company incurred impairment and restructuring charges of approximately $156 million pre-tax, or $0.70 per share after-tax, primarily reflecting impairments of 272 stores due to COVID-19-related store closures. In addition, the company impaired certain corporate and other assets and incurred restructuring charges. In the first quarter of 2019, the company incurred restructuring charges of $1.5 million pre-tax, or $0.01 per share after-tax." Jay Schottenstein, AEO's Chairman and CEO commented, "In the midst of this unprecedented crisis, the strong character of our company and associates has been apparent. I'm extremely proud of the team's agility and humanity as we have taken immediate actions to ensure the health and safety of our people, preserve financial strength and prepare AEO for a new future. Store closures and aggressive inventory liquidation had a significant impact on our first quarter financials. Yet customer engagement remained high and digital demand accelerated, well-exceeding our expectations. Aerie's performance was truly exceptional despite store closures. I'm very pleased to see stores re-opening strong, supported by industry-leading health and sanitization measures to ensure safe and secure stores for our associates and customers. American Eagle and Aerie will be well-positioned for the back-to-school and fall seasons. We will offer compelling new collections and deliver the best customer experiences. AEO entered this crisis with a strong balance sheet and two of the most recognized, trusted and loved brands. Recent liquidity measures will protect our financial strength and enable us to continue to invest in our business, further solidifying our competitive position. We view this moment as an inflection point to accelerate strategies to emerge stronger, leaner, and more agile to effectively win in a post-COVID-19 world."
AEO
Jun 2, 2020 | 14:20 EDT
Notable companies reporting before tomorrow's open, with earnings consensus, include Campbell Soup (CPB), consensus 76c... Cinemark (CNK), consensus (18c)... American Eagle (AEO), consensus (29c).