Shares of Aeropostale Inc. climbed 5.3 percent Friday, sparked by a strong fourth-quarter performance and a better-than-expected 2010 profit guidance.
Late Thursday the clothing retailer reported earnings of 99 cents per share on sales of $801.2 million. This topped the expectations of analysts polled by Thomson Reuters, who predicted a profit of 95 cents per share on revenue of $786 million.
Aeropostale has outperformed competitors in the slow economy, drawing customers with lower prices than other teen retailers such as Abercrombie&Fitch.
Michelle Tan of Goldman Sachs said in a client note that the retailer's fourth-quarter profit beat her 94 cents per share estimate. But she cautioned that it will be hard for Aeropostale to keep outperforming the industry as its significant sales and margin gains over the past couple years took above prior peaks.
Still, Tan raised her price target for Aeropostale shares to $26 from $23 as she lifted her earnings estimates on higher sales and the company's gross margin outlook.
Aeropostale, based in New York, said Thursday that its 2010 earnings per share would be 15 percent higher its than 2009 profit of $2.27 per share, implying it expects to earn about $2.61 per share. Analysts surveyed by Thomson Reuters were forecasting $2.48 per share.
Jeffrey Klinefelter of Piper Jaffray boosted his rating of Aeropostale shares to "Neutral" from "Underweight," partly on the company's steady execution, active buybacks and healthy capital position. He raised his price target for the shares to $31 from $24.
Aeropostale's stock rose $1.44 to $28.49 in afternoon trading. Over the past year, the shares have traded between $29.90 to $15.94.
