American Eagle shares slid another 2.5 percent on Thursday, as the teen retailer's third-quarter outlook continued to spark concern among investors.
But analysts were quick to call the selloff overdone, saying the company continues to steal share from its competitive set, even as it raises prices.
"Despite a highly promotional retail environment, American Eagle was able to drive sales while successfully reducing promotions," said Stifel Nicolaus analyst Richard Jaffe, who has a $20 target price and "buy" rating on the retailer.
"This is evidence to us that the customer is responding favorably to the company's improved merchandise," he said.
Though investors balked at the retailer's forecast for a mid-single digit increase in same-store sales for the third quarter—which would mark a deceleration from the current quarter's 11 percent growth—analysts said there are a number of factors weighing in American Eagle's favor.