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Kohl's shares fall after analyst downgrades stock

NEW YORK (AP) -- Kohl's stock fell 4 percent on Tuesday after an analyst downgraded the department-store operator based on economic factors weighing on consumer spending and tough competition.

THE SPARK: Morgan Stanley analyst Kimberly C. Greenberger said in a note to investors that one can't ignore larger economic factors that might hurt consumer spending, such as the payroll tax increase, which cut into Americans' paychecks this year.

THE ANALYSIS: Because Kohl's targets middle income shoppers rather than luxury spenders, it is "especially vulnerable," Greenberger said.

In addition, J.C. Penney reintroducing some sales and coupons could add to already tough competition between department stores, she added.

She downgraded the stock to "Underweight" from "Equal-weight" and lowered her earnings estimate for fiscal 2013 to $4.15 per share from $4.28. Analysts expect $4.37, on average, according to a FactSet poll.

SHARE ACTION: Shares of Kohl's Corp. fell $2.09, or 4.3 percent, to $46.45 in afternoon trading. The stock has traded between $41.35 and $55.25 during the past year and had been up about 13 percent year-to-date.