MKM Partners Raises Aeropostale (ARO) Price Target From $35 to $41

MKM Partners analyst Linda Tsai maintained her Buy rating for shares of Aeropostale Inc (NYSE: ARO) and raised the price target from $35 to $41.

Tsai noted that Aeropostale reported earnings above consensus estimates and provided strong guidance for future results, which she thinks is actually a conservative forecast.

Between same-store sales growth, a stock buyback, improved margins and other factors, the analyst wrote that had good upside potential.

The MKM Partners analyst wrote, "we are raising our 1Q10 EPS estimate from $0.37 to $0.41, our CY10 EPS forecast from $2.70 to $2.90 and our CY11 EPS forecast from $3.05 to $3.50. We are forecasting 20% EPS growth in CY11 (on top of 25% in CY10E), based on 7% square footage growth, 3% same-store sales growth, 30 basis points of improvement in operating margin (to 18%) and a $200 million stock buyback. This forecast is significant because it shows that, with modest assumptions, including the continued expansion of p.s. Aero, the company can be viewed as a 20% growth retailer."