UPDATE: KeyBanc Downgrades Aeropostale to Hold, Removes PT on Valuation

In a report published Monday, KeyBanc downgraded its rating on Aeropostale (NYSE: ARO) from Buy to Hold, and removed its $18.00 price target.KeyBanc noted, “We believe that the middle income consumer remains pressured and move to the sidelines on two stocks that are in the midst of transformational activities – Aeropostale, Inc. (ARO-NYSE) and Ascena Retail Group, Inc. (ASNA-NASDAQ). With a +15% increase in gas prices since January 17, 2013, a roughly $36 billion gap in tax refunds paid year-over-year, and the impact of the payroll tax, we believe that consumers remain pressured. For Aeropostale, the Company is still in the early innings of moving its logo business to a higher fashion content business. Change comes slowly in such processes, and the de-emphasis on logo may pressure near-term results. At Ascena, the Company faces a difficult turnaround and integration with its recently acquired businesses and its multi-year growth driver, Justice, is showing signs of a slowdown. Valuation for both companies remains reasonable, but with the potential for further earnings pressure, we move to the sidelines.”Aeropostale closed on Friday at $12.76.