.September 19, 2024 03:25:00 AM

Five Below (NASDAQ:FIVE) shares dropped over 2% pre-market after JPMorgan downgraded the company to Underweight from Neutral, setting a new price target of $95.

JPMorgan analysts expressed concerns over Five Below’s performance, noting a decline in the company’s “comp ticket” in 9 out of the last 10 quarters as consumers maintain strict budgets.

The analysts also mentioned that the impact from the “Five Beyond” initiative is expected to decrease in fiscal 2025 and 2026 as the comparable base expands.

Five Below may face margin pressures in 2025 due to labor investments and executive compensation, potentially limiting profit flow-through as the company focuses on pricing and product strategies.