May 23 Aeropostale Inc could raise
doubts about continuing as a going concern as soon as next year,
brokerage Morgan Stanley said a day after the teen apparel
retailer reported its seventh straight quarterly decline in
Aeropostale lost more than a fifth of its market value on
Friday after it also reported its sixth straight quarterly loss
and forecast a bigger-than-expected loss for the current
"Aeropostale occupies the weakest competitive position in
teen retail, and continues to cede market share to cheap fashion
retailers and other teen retailers," brokerage Morgan Stanley
said in a note.
"We think it is a structurally challenged business in
decline," said Morgan Stanley analyst Kimberly Greenberger, a
five-star rated analyst, according to Thomson Reuters StarMine.
Greenberger, who cut her price target on the stock to $3
from $3.50 and maintained an "underweight" rating, said she
expects "going concern issues in 2015/2016" unless the company
stabilizes its business.
Aeropostale could not be immediately reached for comment.
Its shares fell to $3.50 in morning trading, making the
stock the top percentage loser on the New York Stock Exchange.
The company reported on Thursday a 13 percent drop in
same-store sales for the first quarter as shoppers shun its
logo-centric clothes in search of trendier alternatives.
Brokerage BMO Capital Markets cut its target price to $3.50
"With a core business too far off the mark, and threatening
to tarnish the brand, we don't see things turning for Aero with
the environment as challenging as it is currently." BMO analyst
John Morris wrote in a note to clients.
At least five brokerages including Cowen & Co, Janney
Capital Markets and Jefferies & Co cut their price targets on
According to Thomson Reuters data, at least four analysts
have a "sell" rating on Aeropostale, while 21 recommend "hold".
Only two analysts have a "buy" rating on the stock, which
has lost about three-quarters of its value in the last 12 months
up to Thursday's close.
(Reporting by Siddharth Cavale and Shailaja Sharma in
Bangalore; Editing by Don Sebastian)