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Why The Container Store (TCS) Was Downgraded

Story updated at 9:45 a.m. to reflect market activity.

NEW YORK (TheStreet) -- The Container Store (TCS) was downgraded to "underperform" from "neutral" by Bank of America-Merrill Lynch Monday.

The Container Store fell 3.6% to $33.9 in morning trading.

The bank lowered its price target for the retail chain to $32 from $46. The downgrade was a valuation call.

Analyst Denise Chai said, "We are downgrading TCS to Underperform and lowering our PO to $32 on 40x 2015E EPS (from $46 on 50x) as we see risk to 4Q EPS and TCS's P/E multiple which is at significant premium to hardline peers. We are also lowering estimates (see below). In our view, both consensus estimates and guidance do not fully account for significant weather headwinds through most of 4Q."

TCS ChartTCS data by YCharts

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