American Eagle falls after BofA turns bearish on tariffs impact

American Eagle Outfitters' AEO.N shares down 3.6% to $12.39 early Mon after BofA Global Research downgrades apparel retailer to 'underperform' from 'neutral' and trims PT by $1 to $10

BofA analyst Christopher Nardone said in note he sees a longer path to more normalized earnings profile in current environment and cuts EPS estimates to reflect impact of higher tariffs and lower Aerie brand sales

Nardone said both the AE and Aerie brands are in "tough positions" to navigate tariffs and doesn't think either has much pricing power

While the recent Sydney Sweeney denim ad campaign may boost AE sales near term, Nardone said he doesn't assign a high likelihood that momentum from this campaign "can fully inflect the business over the long run"

Regarding the stock's dividend, Nardone lowers rating from 7 (same/higher) to 8 (same/lower) as he sees risk of a cut given a high payout ratio

Of 11 analysts covering AEO stock, 1 rates "buy", 7 rate "hold" and 3 recommend "sell"; median PT is $11 - LSEG data

With move on the session, shares down ~26% YTD vs nearly 1% drop in S&P 600 Apparel Retail sub index .SPSMCRETA

Pittsburgh, Pennsylvania-based AEO slated to report fiscal Q2 results on Weds, Sept 3, after the bell