Retail stock American Eagle Outfitters Inc (NYSE:AEO) was last seen down 3.4% at $12.42, after a downgrade from BofA Global Research to "underperform" from "neutral," with a price-target cut to $10 from $11. The firm cited tariff pressures and weakening sales momentum, despite short-term upside from back-to-school shopping and the Sydney Sweeney campaign.
Analysts are overwhelmingly bearish on the equity. Of the 13 in coverage, only one brokerages carries a "strong buy" rating, with 10 a "hold," and two a "strong sell." Meanwhile, the 12-month consensus price target of $11.88 is a 4.4% discount to current levels.
Options bears are chiming in on the bear note. So far, 38,000 puts have been exchanged -- nine times the intraday average put volume -- in comparison to just 3,605 calls. The September 9.50 put is the most popular, with new positions opening there.
The $12 level, which has provided a floor for pullbacks since the start of the month, is keeping losses in check. Since the start of the year, AEO is down 25.3%.
Short covering could provide some tailwinds in the near term. Short interest is up 57.9% over the last two weeks, now representing 17.6% of the stock's available float, leaving plenty of short squeeze potential.
