American Eagle Outfitters could face trouble moving forward, according to Jefferies. Analyst Randal J. Konik downgraded retailers to continue buying. Analysts see stocks underperforming in a possible recession and resulting slowdown in consumer spending. He also lowered his price target to $16 from $18. The new target is just below where American Eagle closed Tuesday. “Apparel/footwear is typically an underperforming category from the start to the exit of a recession and typically recovers with overall spending. On average, over the past 8 recessions, the apparel/footwear category has seen no growth until the post-recession quarter,” Konik wrote. in Wednesday’s note. They also lowered their sales growth outlook for 2023, expecting earnings to remain flat for the year. The following consensus calls for 3% expansion. Konik added that at 14 times forward earnings, the stock is trading at a premium to its three- and five-year average price. American Eagle shares have rallied more than 14% in 2023. They are also up 64% since the end of September. The stock was down 1.8% in the premarket. AEO mountain AEO YTD in 2023 Jefferies also downgraded other apparel companies to buy, AKA Brands, Torrid Holdings and Lulu’s Fashion Lounge, as they were affected by the slowdown in demand. Konik reaffirmed his buy rating on footwear brands Nike, Foot Locker and Boot Barn, citing greater resilience in the footwear sector. “When our analysis of the PCE spending category combines footwear with apparel sales, we believe that footwear will be more resilient. Footwear typically has a shorter replacement cycle than apparel, which we believe strengthens sales resilience. In the footwear space, we prefer BOOT, FL, and NKE,” the analyst wrote. — CNBC’s Michael Bloom contributed to this report.