Piper Sandler maintains Ollie’s stock with $126 target

On Wednesday, Piper Sandler reaffirmed its positive stance on Ollie’s Bargain Outlet (NASDAQ:OLLI), maintaining an Overweight rating and a $126.00 price target, well above the current trading price of $100.97. The firm’s analyst highlighted Ollie’s as a top pick among discount retailers, particularly in light of the current economic challenges that include tariffs and waning consumer confidence. According to InvestingPro data, analysts maintain a bullish consensus with price targets ranging from $105 to $133, suggesting significant upside potential. The company’s strong financial health score of 2.63 (rated as "Good") supports this positive outlook. The analyst believes that Ollie’s closeout business model is well-positioned to capitalize on these market conditions. The company’s strategy is expected to be further bolstered by the recent liquidation of Big Lots (NYSE:BIG), which could lead to significant sales increases for Ollie’s in 2025, as they take over former Big Lots locations.

According to the analyst, Ollie’s Bargain Outlet stands out for several reasons. The company’s closeout model is likely to experience steady sales and could benefit from consumers looking for more affordable options amid a potential spending downturn. InvestingPro analysis reveals impressive revenue growth of 12.48% in the last twelve months, with a healthy gross profit margin of 40.2%. These metrics are among 12+ key financial indicators available to Pro subscribers, along with exclusive Fair Value calculations and detailed company health assessments. Additionally, the current economic uncertainty and tariffs are anticipated to create a more favorable environment for closeout activities over the next year. The analyst notes that periods of change typically drive closeout opportunities, and the current market is undergoing rapid shifts.

The liquidation of Big Lots is also seen as a pivotal event for Ollie’s, marking the most significant competitive store closure in the company’s over 40-year history. This development not only opens up market share possibilities for Ollie’s but also supports the acceleration of its store growth. The company’s strong financial position, with a current ratio of 2.91 and moderate debt levels, positions it well for this expansion opportunity. InvestingPro subscribers can access detailed expansion metrics and comprehensive Pro Research Reports that provide deep-dive analysis of growth opportunities and risks. The analyst suggests that the move into former Big Lots stores could lead to higher-than-average productivity for new Ollie’s locations.

The analyst’s outlook for Ollie’s is further supported by the strong performance of the company’s stock following the third-quarter earnings report, despite a sell-off leading up to the earnings release. The robust reaction to the Q3 earnings indicates investor confidence in Ollie’s ability to navigate the retail landscape effectively.

In conclusion, Piper Sandler’s analysis suggests that the consensus earnings per share (EPS) estimates for Ollie’s in 2025 could be conservative, with the potential for the company to surpass expectations given the forecasted unit growth of over 13%. The company’s current P/E ratio of 29.51 and EV/EBITDA of 21.42 reflect market confidence in its growth trajectory, though InvestingPro’s Fair Value analysis suggests the stock is currently trading at a premium to its intrinsic value. This positive outlook reflects the firm’s belief in Ollie’s strategic positioning and its capacity to thrive amidst the current economic uncertainties.

In other recent news, Ollie’s Bargain Outlet Holdings Inc. reported significant developments that have captured the attention of investors. RBC Capital Markets adjusted Ollie’s stock price target to $133, maintaining an Outperform rating, in response to the company’s acquisition of 40 additional store leases from Big Lots. RBC projects a 3% increase in comparable store sales for the fourth quarter, slightly above the consensus estimate, with an adjusted EPS of $1.22. Meanwhile, KeyBanc reiterated an Overweight rating with a $125 price target, highlighting Ollie’s strategic expansion plans, including the opening of approximately 75 new stores in 2025. In contrast, Jefferies downgraded the stock from Buy to Hold and lowered the price target to $111, citing concerns about inventory growth outpacing sales growth. Additionally, Ollie’s appointed Eric van der Valk as the new CEO, a move expected to sustain the company’s growth trajectory. RBC Capital also maintained its Outperform rating with a $130 target, considering the potential impact of Big Lots store closures near Ollie’s locations. These developments underscore the dynamic nature of Ollie’s current market position and future prospects.

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