Service International (SCI) is expected to see a decline in sales of preplanned cemetery services as overall luxury spending is slowing down, Truist Securities said in a note Tuesday.

The analysts said they are lowering their Q2 estimates for the company, particularly for preneed cemetery sales, which are expected to decline 8% year over year from a previously estimated 2% year-over-year increase. This is based on broader signs of weakening high-end discretionary spending.

The analysts also slashed Q2 adjusted earnings per share estimate to $0.82 from $0.88. "We believe that there is increased risk that high-end customers in the market to purchase expensive cemetery plots 10-plus years ahead of time may delay that decision in the current macro environment."

There's also a mild risk from declining equity and bond markets, which could impact returns from the trusts that fund preneed sales. While manageable short term, this could grow more significant if market weakness persists, the analysts added.

Truist kept a buy rating and a $92 price target for the company.

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