jetcityimage/iStock Editorial via Getty Images
Five Below (NASDAQ:FIVE) fell in early trading on Tuesday after J.P. Morgan downgraded the discounter to a Neutral rating after having it lined up with an Overweight rating. The firm thinks Five Below (FIVE) is in harm’s way of seeing consumers pull back on spending on discretionary items.
Analyst Matthew Boss noted that over the last eight quarters, Five Below’s (FIVE) comparable basket or ticket has consistently declined year-over-year as consumers work through tight budgets as core inflation (+5.5%) outpaces wage growth (+5.0%). Boss also highlighted that a key takeaway from a J.P. Morgan consumer survey showed that 33% of consumers said they did not expect household bills/costs to be unchanged or lower in the coming months vs. 29% of respondents in September of last year. Notably, 88% of consumers in the survey indicated that they do not find current excess savings or wage increases as adequate to support their standard of living this year, resulting in a notable sequential deterioration in discretionary spending expectations relative to the September survey.
J.P. Morgan slashed its price target on Five Below (FIVE) to $170 from $215.
Shares of Five Below (FIVE) dropped 1.10% in premarket action on Tuesday. The discounter stock is already down more than 30% on a year-to-date basis.
