UPDATE: Macquarie Downgrades Francesca's

Macquarie downgraded Francesca’s Holdings Corp (NASDAQ: FRAN) in a report issued Wednesday from Outperform to Underperform and lowered the price target from $16 to $11.

Analysts led by Laurent Vasilescu and Stephanie Wakeham were "particularly concerned with the last five quarters of negative comps considering that approximately 60 percent of the comp store base consists of locations which have been open between one to three years."

"As the company reports single-digit negative comps, we estimate that the more mature stores are comping at a double-digit negative rate. We anticipate that the company may need to slow down its real estate strategy in order to focus on turning the comps around with the existing store set," according to Vasilescu.

The report noted that Francesca's only spent $700,000 in advertising in FY 2013, 0.2 percent of total revenues compared to comparable retailers spending 3.2 percent of net sales on advertising.

Vasilescu commented that "marketing investments need to increase as the company becomes a national retailer." If the company "spent in line with competitors on advertising, our FY15 EPS of $0.94 would decline by 19% to $0.76."

The report concluded that there is "further downside" to the company. Canaccord also downgraded the stock recently.

Francesca’s Holdings Corp recently traded at $12.63, down 3.1 percent.