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On Wednesday, Morgan Stanley (NYSE:MS) analysts reiterated their Equalweight rating on Ollie’s Bargain Outlet stock (NASDAQ: OLLI), maintaining a price target of $118.00. Currently trading at $109.91, the stock sits within a broader analyst target range of $105-$137, with a consensus recommendation leaning towards Buy. Analysts emphasized the potential for Ollie’s to enhance its position in the closeout industry, driven by a strong product pipeline and the performance of acquired Big Lots (NYSE:BIG) stores. They noted that if consumers continue to prioritize value, comparable store sales could exceed Ollie’s long-term growth expectations. According to InvestingPro, the company maintains a strong financial health score of 2.75 (GOOD), with liquid assets exceeding short-term obligations.
In their optimistic scenario, analysts projected that favorable conditions could lead to a 2.8% increase in comparable sales in 2025 and a 3.5% rise in 2026. This growth, coupled with improved operating leverage and merchandise margins, could push earnings before interest and taxes (EBIT) margins to approximately 11.6% in 2025 and 12.0% in 2026. The company has demonstrated solid performance with revenue growth of 8.7% and current diluted EPS of $3.25. Under this scenario, earnings per share (EPS) could reach $3.98 in 2025 and $4.69 in 2026, with a bull case price target of $150 based on a 32x price-to-earnings (P/E) ratio for 2026.
Conversely, the bear case outlined by analysts considered potential macroeconomic challenges that could impact discretionary spending and tariffs affecting closeout merchandise availability. Difficulties in integrating Big Lots stores could result in comparable sales growth at the lower end of Ollie’s long-term range. The combination of limited topline growth, unfavorable merchandise mix, and increased store expenses could lead to a contraction in EBIT margins to around 10.5% in 2025 and 10.4% in 2026. Currently trading at a high P/E ratio of 34.09x and elevated EBITDA multiple, InvestingPro analysis suggests the stock is slightly overvalued at current levels. In this scenario, EPS might be $3.39 in 2025 and $3.61 in 2026, with a bear case price target of $70 based on a 19x P/E ratio for 2026.
Morgan Stanley’s analysis reflects a balanced view, considering both upside and downside risks, as Ollie’s Bargain Outlet navigates market dynamics and the integration of new assets. For deeper insights into OLLI’s valuation and growth prospects, including 10 additional ProTips and comprehensive financial metrics, visit InvestingPro.
In other recent news, Ollie’s Bargain Outlet reported impressive first-quarter 2025 earnings, with earnings per share (EPS) of $0.75, surpassing analyst expectations of $0.71. The company also exceeded revenue forecasts, achieving $576.8 million compared to the predicted $565.9 million. Following these results, Ollie’s maintained its full-year guidance for net sales, projecting a range between $2.579 billion and $2.599 billion. Analysts from KeyBanc, RBC Capital, Citi, and Truist Securities have all reaffirmed their positive outlooks on Ollie’s stock, with price targets ranging from $128 to $135. KeyBanc highlighted the company’s strategic growth through the acquisition of Big Lots locations, while RBC Capital noted the importance of the upcoming quarter for investor sentiment. Citi analysts pointed out Ollie’s strong market share gains, and Truist Securities emphasized the company’s potential benefits from competitor store closures. Ollie’s continues to expand aggressively, opening a record 25 new stores in the first quarter and maintaining a strong inventory position amid market disruptions.
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