American Eagle Shares Downgraded by Bank of America, Price Target Cut to $10

American Eagle Outfitters (AEO) shares fell 3.5% after Bank of America downgraded the company to "Underperform" from "Neutral" and trimmed its price target to $10 from $11. The downgrade was due to concerns over higher tariffs and slowing sales at the company's activewear brand, Aerie. The bank also reduced its earnings per share estimates for American Eagle for fiscal years 2025 and 2026 by 8% and 30%, respectively. The stock market's reaction indicates the news is meaningful but not fundamental to the business. American Eagle is down 25.9% since the beginning of the year and is trading 44.1% below its 52-week high.

American Eagle Outfitters (AEO) shares dropped 3.5% following a downgrade from Bank of America (BofA) to "Underperform" from "Neutral." The downgrade was prompted by concerns over higher tariffs and slowing sales at the company's activewear brand, Aerie. BofA also trimmed its price target to $10 from $11 and reduced its earnings per share (EPS) estimates for fiscal years 2025 and 2026 by 8% and 30%, respectively [1][2][3][4].

The stock market's reaction suggests the news is significant but not fundamentally altering the business outlook. American Eagle has faced a challenging year, with a 25.9% decline since the beginning of 2025 and trading 44.1% below its 52-week high.

BofA cited higher tariffs and lower sales of Aerie as key factors contributing to the downgrade. The bank noted that the boost from the recent Sydney Sweeney campaign for American Eagle's denim brand may not fully offset the impact of tariffs. Despite these challenges, potential offsets such as stronger-than-expected performance from the Sydney Sweeney campaign or seasonal strength in denim during the back-to-school period remain [1][2][3][4].

Investors should closely monitor American Eagle's upcoming financial results and any further analyst revisions to stay informed about potential stock price movements. The company's Zacks Consensus EPS estimate has moved 0.3% lower over the past month, and AEO currently features a Zacks Rank of #3 (Hold) [2].

References:
[1] https://stocktwits.com/news-articles/markets/equity/american-eagle-slips-4-premarket-as-bofa-downgrade/chssYdJRd1M
[2] https://www.ainvest.com/news/bank-america-downgrades-american-eagle-underperform-shares-drop-2508/
[3] https://seekingalpha.com/news/4488709-bofa-cuts-rating-on-american-eagle-citing-tough-current-operating-environment
[4] https://ca.finance.yahoo.com/news/tough-time-turnaround-bofa-downgrades-124008456.html