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On Monday, Barclays (LON:BARC) analysts reiterated their Equalweight rating and maintained a $93 price target on Five Below stock (NASDAQ: NASDAQ:FIVE), below the current trading price of $116.57. The stock has shown strong momentum with an 8.67% gain in the past week, and according to InvestingPro data, 16 analysts have recently revised their earnings estimates upward. The analysts highlighted improved performance in recent quarters and noted potential benefits from competitor struggles as factors contributing to the company’s better trajectory.
The analysis pointed out that Five Below’s recent merchandising and store-related adjustments are showing positive results. With a market capitalization of $6.42 billion and an impressive 17.51% return over the past six months, the company is benefiting from the challenges faced by competitors such as Big Lots (NYSE:BIG) and Party City, as well as potential slowdowns at Temu and weaknesses at Target (NYSE:TGT). InvestingPro’s financial health assessment rates Five Below as "GOOD," supported by liquid assets exceeding short-term obligations.
Despite these improvements, Barclays analysts expressed caution regarding the company’s guidance. They noted that current tariff rates are higher than those incorporated into guidance, and there remains uncertainty around future tariff impacts. The analysts also mentioned that inventory checks in July could offer more clarity, although they do not expect significant changes to guidance in the near term.
The analysts added that Five Below’s stock is trading at 25 times the high end of its initial guidance of $4.72 for this year. They see potential for earnings per share to reach closer to $5, driven by current sales momentum. However, they believe that breaking out of the $5 range and reaching $6 in earnings per share is a longer-term goal, likely more relevant to fiscal year 2027.
Overall, Barclays maintains a cautious stance while acknowledging the positive developments in Five Below’s performance and market position. Trading at a P/E ratio of 16.57x with last twelve months earnings per share of $4.60, the stock presents an interesting valuation picture. Discover more detailed insights and 10 additional proprietary tips for Five Below with a subscription to InvestingPro, including exclusive Fair Value analysis and comprehensive financial health metrics.
In other recent news, Five Below has reported a strong start to its fiscal year, exceeding expectations with its first-quarter performance. The company has updated its first-quarter guidance for fiscal 2025, forecasting net sales of approximately $967 million, surpassing the previously anticipated range of $905 million to $925 million. Comparable store sales are projected to increase by about 6.7%, significantly higher than the initial guidance of 0-2%. In line with these developments, Five Below plans to open 55 new stores in the quarter, five more than initially planned.
Analysts have taken note of these positive developments. Citi has raised its price target for Five Below to $121 from $80, maintaining a Neutral rating, while UBS continues to hold a Buy rating with a steady target of $110. Loop Capital has adjusted its price target to $90, keeping a Hold rating, reflecting both optimism about the company’s momentum and caution due to external economic factors. JPMorgan has upgraded Five Below’s stock rating from Underweight to Neutral, though it cut the price target to $57, citing potential margin pressures.
Leadership changes are also on the horizon as co-founder Tom Vellios steps down as Executive Chair, transitioning to an advisory role. Mike Devine is expected to be appointed as the non-executive Chair of the Board, assuming his re-election. These developments come as Five Below continues to navigate tariff challenges and focuses on strategic initiatives under CEO Winnie Park.
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