JPMorgan Downgrades Five Below to Underweight, Stock Drops 2%

Five Below (NASDAQ:FIVE) shares fell more than 2% pre-market on Thursday after JPMorgan analysts downgraded the company to Underweight from Neutral, adjusting their price target to $95 from $89.

The analysts highlighted concerns over Five Below’s performance, noting that in 9 of the last 10 quarters, the company's "comp ticket," or average basket size, has declined year-over-year as consumers stick to strict budgets. The analysts also pointed out that the boost from the "Five Beyond" initiative is expected to diminish in fiscal 2025 and 2026 as the overall comparable base grows. Additionally, Five Below faces potential margin pressures in 2025 due to labor investments and executive compensation, which could limit profit flow-through as the company works on initiatives around pricing and product strategies.