UPDATE: J.P. Morgan Lowering Price Target On American Eagle Outfitters

J.P. Morgan Chase & Co. is out with a research report on American Eagle Outfitters AEO and is lowering its price target to $12 from $14, but is keeping its Neutral rating on shares. In a note to clients, J.P. Morgan Chase & Co. writes, "AEO reported 2Q11 EPS of $0.10 versus the Street at $0.11 and prior guidance of $0.10-$0.13. The company posted a better-than-expected flat comp which came at the expense of margins as gross margins dropped ~250 bps versus 2Q10. Looking to 3Q11, management guided EPS to a range of $0.22-$0.27 vs. the Street at $0.26 and FY11 to $0.85-$0.95 vs. the Street at $0.93. We await greater visibility on what is likely to be an internal tug-of-war between driving comp with newly announced, fully stocked artillery of inventory at the company's disposal and the cost of doing so." Shares of AEO lost 43 cents yesterday to close at $10.17.