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Five Below Stock Rises as Loop Capital Sees More Upside

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Stock upgraded by Loop Capital

Five Below stock was up 2.1% as of 1:33 PM ET today after Loop Capital reaffirmed its “buy” rating and raised its price target for Five Below stock to $145 from $120. Loop Capital’s price target is supported by Five Below’s improved merchandising and store-level execution, which are likely to drive higher sales. On December 10, Loop Capital upgraded its rating for Five Below stock to “buy” from “hold” and raised its price estimate to $120 from $110.

We’ve seen a lot of analyst activity with Five Below stock since the start of this year. On March 7, Oppenheimer initiated coverage with an “outperform” rating and price target of $140. J.P. Morgan lowered its rating for Five Below stock to “neutral” from “overweight” on February 22.

On January 7, Morgan Stanley upgraded Five Below stock to “overweight” from “equal weight,” and it raised its price target to $118 from $113.

Five Below is a value retailer that offers merchandise for children and teens at a compelling price of $5 or below. Five Below stock was up 13.7% on a year-to-date basis as of March 18.

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Expectations for upcoming results

Five Below is slated to announce its results for the fourth quarter of fiscal 2018 after the financial markets close on March 27. The retailer’s net sales grew 23.7% to $956.9 million in the first nine months of fiscal 2018, which ended on November 3, 2018. Five Below’s top-line growth in the first nine months was driven by a contribution from new stores and same-store sales growth of 3.6%. Five Below opened 120 new stores in the first nine months of fiscal 2018.

On January 14, Five Below announced a 24.6% rise in its holiday period (November 4, 2018, to January 5, 2019) net sales and same-store sales growth of 4.9%.

Five Below expects its fourth-quarter sales to slightly exceed its guidance range of $593 million–$600 million. The company expects its fourth-quarter EPS at the high end of its $1.53–$1.57 guidance range.

Analysts expect Five Below’s fourth-quarter sales to grow 19.2% to $602 million and its adjusted EPS to rise 33.9% to $1.58.

An expanding store network, enhanced merchandise assortment, and marketing investments are expected to drive Five Below’s performance.

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