American Eagle Outfitters could be in trouble going forward, according to Jefferies. Analyst Randal J. Konik downgraded the retailer to hold from buy. The analyst sees the stock underperforming in a likely 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. “Clothing/footwear is typically a low performing category from the start to the exit of the recession and usually recovers with overall spending. On average, over the past 8 recessions, the clothing/footwear category saw no growth until the quarter coming out of the recession,” Konik wrote in a Wednesday note. He also cut his sales growth outlook for 2023, expecting revenue to stay flat for the year. That’s below a consensus calling 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 valuations. American Eagle shares have rallied more than 14% in 2023. They are also up 64% since the end of September. The stock dipped 1.8% in the premarket. AEO YTD mountain AEO in 2023 Jefferies also downgraded other apparel companies to hold from buy, AKA Brands, Torrid Holdings and Lulu’s Fashion Lounge, due to exposure to a demand slowdown. Konik reiterated his buy rating for footwear brands Nike, Foot Locker and Boot Barn, citing greater expected resiliency in the footwear sector. “While our analysis of the PCE category spend combines footwear w/ apparel sales, it is our belief that footwear will be more resilient. Footwear typically has a shorter replacement cycle than apparel, which we believe reinforces sales resiliency. Within the footwear space, we prefer BOOT, FL, and NKE,” wrote the analyst. —CNBC’s Michael Bloom contributed to this report.