American Eagle Outfitters (NYSE:AEO) Has Limited Downside Says FBR

Even though FBR Capital is lowering their numbers on American Eagle Outfitters (NYSE:AEO) after a weak Christmas season and their apparent inability to string together solid results for more than one quarter, they still see the company as having limited downside going forward.

FBR said, "We were feeling a little more constructive on AEO heading into December, but the case we were building for liking fell down today. The problem with AEO, in our view, is the inconsistency. The company cannot seem to string together a solid performance for more than a few months at a time. Still, with AEO's more than $3 per share in cash on the balance sheet and a still decent brand, we believe the stock has limited downside from here.

"We are lowering our 4Q EPS estimate to $0.41 from $0.46. Our CY10 EPS estimate is now $0.99 versus the previous estimate of $1.04. We are also revising our CY11 EPS estimate to $1.08 from $1.14...We are lowering our 4Q sales estimate to $913.9 million from $968 million. We are lowering our CY10 sales estimate to $2,965.3 million from $3,019.9 million and our CY11 sales estimate to $2,984.5 million from $3,039.8 million."

FBR Capital maintains a "Market Perform" on American Eagle Outfitters, which was trading at $15.07, up $0.60, or 4.15 percent, as of 1:06 PM EST. FBR has a price target of $17 on them.