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Analyst lowers Chico's FAS rating, price target

NEW YORK (AP) -- Shares of Chico's FAS dropped more than 4 percent on Monday as an analyst cut the clothing company's rating and price target, saying its earnings per share growth is likely to start slowing over the next few years.

THE SPARK: Anna Andreeva of FBR Capital Markets & Co. lowered Chico's rating to "Market Perform" from "Outperform." She reduced the price target for the company whose brands include Chico's, White House Black Market, Soma Intimates and Boston Proper to $18 from $20.

THE ANALYSIS: Andreeva said in a client note that uncertain economic conditions remain an overhang for Chico's customers. The retailer's inventory is expected to climb next year in line with sales and its expense savings may not be as large in 2013.

The stock price is also lofty, up 68 percent for the year to date.

Andreeva anticipates that earnings per share growth for the Fort Myers, Fla.-based company will be between 15 percent and 18 percent over the next few years, in comparison with 40 percent on average over the past three years.

SHARE ACTION: Chico's FAS Inc.'s stock declined 87 cents, or 4.7 percent, to $17.89 in afternoon trading. The stock has traded in a range of $10.09 to $19.76 over the last year.