BofA Securities Downgrades American Eagle Outfitters (AEO) to Underperform

BofA Securities analyst Christopher Nardone downgraded American Eagle Outfitters (NYSE: AEO) from Neutral to Underperform with a price target of $10.00 (from $11.00).

The analyst comments "We downgrade AEO to Underperform from Neutral; we see a longer path to a more normalized earnings profile in this environment. We cut our F25/F26 EPS estimates by 8%/30% to $0.65/$0.95 to reflect the impact of higher tariffs and lower Aerie sales. With the stock trading at 5x EV/EBITDA (F26E) or 13.5x P/E, we see downside risk to estimates and the multiple given a worsening fundamental backdrop (mall-based peers trading at 5.6x EV/EBITDA and 11.7x P/E). We revise our income rating from 7 (same/higher) to 8 (same/lower) as we see risk of a cut given a high payout ratio (76% on our F25 EPS estimate). To reflect our lower estimates, we reduce our PO to $10 (from $11), now based on 4x F26E EV/EBITDA (from 3.5x given re-rating in peer multiples but still a discount to peers)."

For an analyst ratings summary and ratings history on American Eagle Outfitters click here. For more ratings news on American Eagle Outfitters click here.

Shares of American Eagle Outfitters closed at $12.85 yesterday.

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