Shares of RH (RH - Get Report) were down 4.10% to $25.24 in pre-market trading on Tuesday after Buckingham Research cut its rating on the stock, saying the choppy recovery ahead raises liquidity concerns.

The firm downgraded shares to "underperform" from "neutral" and reduced its price target to $22 from $34, implying 16% downside from current levels.

"We expect a choppy road to recovery in FY17, marked by trade offs between revenue and margin, with lingering uncertainty around RH's liquidity emerging as a key focal point for investors," analysts Kelly Halsor and John Steger wrote in the note.

With its first portion of $350 million in convertible debt due in June 2019, the analysts believe potential liquidity issues will loom large in investors' minds this year. There is also potential for another year of negative free cash flow keeping pressure on RH's multiple.

Based on Buckingham's analysis, the retailer is one of the most vulnerable companies in its coverage to possible border adjustment legislation, which if passed, could be a roughly $189 million incremental headwind to free cash flow in fiscal 2018.

"While the brand is still in-tact in the eyes of the consumer, we believe execution challenges and liquidity constraints will take precedent, creating uncertainty around potential EPS recovery, as well as an overhang on RH's multiple," Halsor and Steger said.

The company is expected to report fourth-quarter results on March 30, according to FactSet.

In December, RH reported third-quarter results that topped Wall Street's expectations, but cut its full-year guidance and gave a fourth-quarter outlook well below analysts' estimates.

The company, which sells high-end home furnishings, changed its corporate name to RH from Restoration Hardware Holdings last month.