What happened
Shares of American Eagle Outfitters (AEO 4.97%) were sliding yet again today after an analyst downgraded the company's stock and cut her price target for its shares. Today's drop continues a sell-off that began last week following the company's release of its latest financial results.
The retail stock was down by 8.9% as of 12:09 p.m. ET.
So what
American Eagle investors were already pessimistic about the company's stock after it reported earnings and revenue that were both below analysts' expectations late last week. But today's drop comes as Morgan Stanley analyst Kimberly Greenberger downgraded the stock to underweight, from her previous rating of equal weight.
Image source: Getty Images.
Greenberger cited American Eagle cutting its 2022 guidance as proof that the company's "optimism proved excessive" and also questioned whether or not the retailer would be able to achieve its guidance for the second half of 2022.
She also said that the company's management had set "lofty" guidance for 2023 and that she expects American Eagle to miss its sales and margins goals, according to The Fly.
Greenberger lowered her price target for American Eagle's stock to $8, down from $22.
Now what
Retail stocks have been through the wringer lately as the financial results from many companies in the sector have disappointed shareholders.
Rising material costs, a difficult labor market, supply chain issues, and sky-high inflation have all contributed to investors growing increasingly wary of the retail industry right now.
And when you add into this mix the potential for the U.S. economy to slow down as the Federal Reserve raises interest rates, American Eagle and other retail stocks could likely face continued headwinds in the near future.
