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Ahead of the Bell: PriceSmart downgraded

NEW YORK (AP) -- An analyst lowered his rating for PriceSmart on Wednesday, saying economic risks have increased for the California-based company that runs U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean.

David Strasser of Janney Capital Markets said in a client note that while Latin American economies are among the most attractive in the world due to their demographics and low debt levels, they are not immune from the volatility that is impacting the global economy.

"Panama is highly correlated to global trade, and other key geographies are impacted by global tourism and/or oil prices, all of which are affected by global economic activity," he wrote.

The analyst also said that the San Diego company faces limited competition in its current markets given their small size, but that it could face increased competition in Colombia from companies like Wal-Mart Stores Inc. and Costco WholeSale Corp., as the country is large compared to others in the region and has significant growth opportunities.

Strasser cut PriceSmart to "Neutral" from "Buy" and reaffirmed a $75 price target.

PriceSmart Inc. shares finished at $78.22 on Tuesday. Its shares are down 7.2 percent from a 52-week high of $84.32 on May 4. Its shares traded as low as $56.25 in early October 2011.