American Eagle Stock Soars Higher On Analyst Upgrade

Volume is surging in the options pits as well

Deputy Editor
Aug 12, 2020 at 10:58 AM
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The shares of American Eagle Outfitters Inc (NYSE:AEO) are up 5.4% at $12.18 at last check, after an upgrade from J.P. Morgan Securities to "overweight" from "neutral," with an added price-target hike to $17 from $12. The firm cited an expectation of growth from the company's lingerie brand, Aerie, which has a strong online presence as well as casual and comfortable clothing -- both bonuses amid the pandemic. 

Today, AEO is looking to close above the descending 200-day moving average for the first time since May of 2019. This trendline coincides with the $12 region, which could act as a line of potential support going forward. Year-to-date, the equity is still down 15.9%. 

Coming into today, seven of the 16 analysts in coverage sported a "buy" or better rating on American Eagle stock, with seven at a tepid "hold" and the remaining two at a "sell" or worse. Meanwhile, the consensus 12-month target price of $13.09 is a 5.9% premium to current levels. 

In the options pits, calls are popular. AEO's 10-day call/put volume ratio of 27.37 at the Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 94% of all readings from the last year. This indicates that calls have rarely been picked up at this rate in the past year. 

Today, the retailer is seeing an influx of options activity. So far, 13,000 calls and 2,741 puts have crossed the tape -- six times what's typically seen at this point. The August 12 call is the most popular, followed by the November 12 call. 


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