Shares of Five Below Inc. (FIVE) - Get Report jumped more than 7% on Monday after the discount retail chain received an upgrade from Morgan Stanley to "overweight" from "equal weight," and raised its share-price target by $5 to $118.
Five Below stock rose 7.05%, or $7.61, to close at $115.58 on the Nasdaq stock exchange.
"We view FIVE as a best-in-class retailer with a differentiated, defensible concept and an almost unmatched combination of strong returns / financial metrics and a long store-growth runway," said Morgan Stanley Equity analyst Vincent Sinisi in a research note.
Investors have continued to bid up the company's shares on expectations that its long-term vision of opening some 2,500 stores across the U.S. and putting recent technology and research and development efforts into play will continue to pay off.
Mitigated post-holiday concerns among market watchers about online shopping overtaking traditional bricks-and-mortar store sales have further propelled investor interest in the company's shares, according to Jeff Marks, an analyst with Jim Cramer's Action Alerts PLUS, which holds Five Below in its portfolio.
"We have been recommending FIVE because the company's long-term growth trajectory is so visible, the new store payback period is so economical, and the ambitious regional-to-national-expansion story is so unique that we think it represents one of the most exciting stories in retail," said Marks.
Five Below in November posted third-quarter earnings of 22 cents a share on sales of $312.8 million, though it reduced its fourth-quarter earnings guidance to between $1.53 and $1.57 - below consensus views of $1.57 a share.
Five Below sells toys, tech accessories and room decor for $5 or less. Fake slime, sequined pillows and headphones targeted towards children, adolescents and teens are among its primary offerings.
(This article has been updated with the closing stock price.)