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Wall Street Still Bullish on Five Below ahead of Earnings

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Dec. 4 2020, Updated 10:53 a.m. ET

Majority of analysts retain “buy” rating

Ahead of its upcoming first-quarter, the majority of analysts covering Five Below (FIVE) have maintained a “buy” rating on the stock. As of May 29, of the 17 analysts covering the stock, 65% recommended a “buy” while the remaining recommended a “hold.” Five Below is scheduled to report its first-quarter earnings on June 6.

In the past 30 days, we’ve seen a couple of price revisions for Five Below. On May 25, Deutsche Bank also revised the target price to $84.00 from $85.00. On April 18, Credit Suisse initiated coverage on Five Below with an “outperform” rating and a price target of $88.00.

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For the first quarter, analysts project Five Below to report sales of $291.4 million, up 25.2% from the first quarter of 2017. Also, adjusted EPS are expected to see over twofold growth to $0.33 in the first quarter. Five Below’s focus on the teen and pre-teen demographics, competitive pricing, and locations at high-traffic centers have proven to be major growth catalysts. Five Below is rapidly expanding its store footprint and has raised its target of opening 2,500 stores across the United States by 2020 from its earlier estimate of 2,000.

Currently, analysts’ 12-month average target price for Five Below stock is $78.69, which reflects 11.3% upside to the stock price as of May 29.

Peer ratings

Of the 30 analysts covering Dollar General (DG), 57% have a “buy” rating while 40% rated it a “hold.” About 71.0% of the 28 analysts covering Dollar Tree (DLTR) have given the stock “buy” ratings while just 29% rated it a “hold.” Only one analyst is covering Fred’s (FRED), rating the stock a “hold.”

Currently, analysts’ target price for Dollar General is $108.66, reflecting 12.9% upside to the stock price as of May 29. For Dollar Tree, the mean target price is $111.88, which indicates 17.9% upside. The mean target price for Fred’s is $4.00, which indicates 158.1% upside.

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