Five Below's Stock Dives After Goldman Downgrade

Five Below Inc. tumbled 7.9% in active afternoon trade Wednesday, after the discount retailer was downgraded at Goldman Sachs, which cited concerns over valuation and overly-high earnings expectations. Analyst Stephen Grambling cut his rating to the lowest sell rating, after being at neutral since he started covering the company in late 2012. He cut his stock price target to $30, which is more than 5% below current levels, from $34. He believes overall earnings expectations and the stock price will both decline, given decelerating same-store sales growth, weakness in productivity at new stores and cost pressures from rising wages, advertising and growth investments. "The bottom line is consensus estimates are too high and valuation is overstated," Grambling wrote in a note to clients. Volume in the stock was 2.4 million shares as of 2:30 p.m. Eastern, or about triple the full-day average, according to FactSet. The shares have slumped 22% year to date, while the S&P 500 has tacked on 0.5%.

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