Ahead of the Bell: American Eagle downgraded

Roxanne Meyer downgraded the stock to "Perform" from "Outperform." Meyer said she is less confident that the company's sales will pick up in the second half of the year, and added that American Eagle's jeans may not be in fashion for the back-to-school season.

Late Thursday, Susan McGalla said she will leave American Eagle effective Jan. 31, 2009. Meyer described the move as a surprise that raises doubts about a recovery in sales, and in the success of new marketing concepts.

Also, American Eagle is offering wide-leg jeans during the back to school season, while other teen retailers are selling skinny jeans, and if American Eagle is out of step with jean fashion trends, it will hurt sales of a key product, Meyer said. She also said heavy discounts could cut the company's profits and margins, and economic conditions are still difficult.

She thinks rival Aeropostale Inc. could keep taking market share from American Eagle.

Meyer removed a target price of $20 per share. The stock closed at $15.80 Thursday and is trading at its lowest prices in more than four years.

A company representative wasn't immediately available.