ARO - Believe Good Times Will Continue

We reiterate our Buy rating, $32 target price and estimates with
Aeropostale scheduled to announce 4Q07 results after the close on
Thursday. ARO has declined over 14% (versus a 6.2% decline in the S&P Retailing Index) in the past three trading days after announcing solid February same-store sales of +7%, driven by a downgrade to Sell by a leading investment bank and fears that current growth is unsustainable. Frankly, we believe this downdraft presents investors with a prime opportunity to invest in what we believe will be one of the few retailing winners in the current economic slowdown; we believe the 4Q07 conference call will go a long way to dissuade the shorts and demonstrate the strength of the Aeropostale business model. We would remain buyers of ARO and believe, with the stock now trading at 11.5x our 2008 EPS projections, that the risk/reward remains compe...