Shares of Five Below were rising more than 9% to $127.69 per share.
Loop Capital (Buy rating unchanged, PT raised to $135 from $120)
Five Below’s F2Q 2020 earnings were well ahead of our expectations, which we primarily attribute to deft expense management. We are also pleased to hear F3Q 2020 is off to a strong start—particularly given the fact fiscal consumer stimulus tailwinds have largely abated and Five Below has a fairly nascent e-commerce distribution channel. Finally, we are encouraged to hear management is developing a thoughtful and holistic strategy for the upcoming “COVID-19 Christmas” holiday shopping season. Five Below remains our favorite mid-cap growth idea.
KeyBanc (Sector Weight rating unchanged, no PT)
FIVE operates within a defensible tween discount niche, offering a high energy shopping format, organized into eight shopping worlds, for its tween customer. Our proprietary pricing analysis suggests customers find value that is not replicated at Amazon, as items we have surveyed are notably less expensive on average at FIVE for similar products.
- Bradley Thomas
Jefferies (Buy rating unchanged, $140 PT unchanged)
We like FIVE's nimble, opportunistic business model, and we believe the company has a long pathway for growth, from over 900 units now to 2,500+ in the long term. We expect expanded marketing initiatives to help grow already strong brand awareness and new store productivity.
- Randal Konik
Analysts at Barclays raised the company's price target to $120 from $101 per share with an equal weight rating in anticipation that the company will face headwinds early next year.
One of the firm's concerns is the possibility of a surprise tax bill for customers due to the fact there was was little-to-no withholding on the $600 stimulus unemployment benefit.
Meanwhile, analysts at Morgan Stanley raised their price target to $135 from $125 with an overweight rating on the stock.
The firm now expects Five Below to report 2021 earnings of $4 per share, up from its previous estimate of $3.85 per share. Morgan Stanley's model is also now forecasting same store sales growth between 4% and 5% in the second half of the year vs. the 0-2% a year ago.