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Investing.com - Piper Sandler raised its price target on Ollie’s Bargain Outlet (NASDAQ:OLLI) to $150.00 from $123.00 on Tuesday, while maintaining an Overweight rating on the discount retailer’s stock. Currently trading at $133.81, the stock appears overvalued according to InvestingPro analysis, despite showing strong momentum with a 26% gain over the past six months.
The research firm’s analysis found that Ollie’s items were priced at a 45% discount to Amazon (NASDAQ:AMZN) and 44% to Walmart (NYSE:WMT), representing a stronger price gap compared to recent checks, though not as substantial as in November 2023. Piper Sandler also observed robust closeout inventory flow across categories, particularly in consumables, likely from working with former Big Lots (NYSE:BIG) suppliers. With revenue growth of 8.7% in the last twelve months and a "GOOD" overall financial health score from InvestingPro, the company maintains strong operational metrics.
Ollie’s had guided for second-quarter comparable sales at the low end of a 1-2% range, as June faced difficult year-over-year comparisons due to air conditioner sales during the previous year’s heat wave. Piper Sandler expects the July 2025 heat wave, which brought warmer temperatures to most of the Midwest and Southeast according to Planalytics, largely balanced out these tough comparisons within the quarter. The company maintains healthy liquidity with a current ratio of 2.87, while operating with moderate debt levels.
The firm raised its Q2 comparable sales estimate to +2.0%, above the consensus of +1.6%, noting that comp headwinds from closing Big Lots locations concluded at the end of Q1, with the positive low-to-mid single digit lift to stores with Big Lots overlap expected to continue through year-end.
On margins, Piper Sandler expects lower supply chain costs to remain beneficial, though air conditioners’ lower margin profile may delay margin improvement until next year when the company laps strong heat wave-induced air conditioner sales, with the firm projecting Q2 gross margin expansion of 55 basis points versus consensus expectations of 130 basis points.
In other recent news, Ollie’s Bargain Outlet has seen a series of adjustments in analyst ratings and price targets following its latest financial updates. RBC Capital raised its price target for the company to $144, maintaining an Outperform rating, and expects Ollie’s to exceed market expectations in its upcoming quarterly report. KeyBanc also increased its price target to $145, highlighting Ollie’s as a top pick for 2025 due to its favorable long-term outlook and benefits from store expansion. Citi reiterated a buy rating with a $133 price target, citing Ollie’s market share gains and potential benefits from tariff disruptions and consumer value shopping trends.
Conversely, UBS maintained a Neutral rating with a $123 price target after Ollie’s reported a comparable-store sales increase of 2.6%, surpassing expectations. Piper Sandler slightly lowered its price target to $123 while maintaining an Overweight rating, following Ollie’s first-quarter results. The firm’s sales guidance suggests potential growth, with earnings per share guidance remaining steady. These recent developments reflect a varied analyst outlook on Ollie’s Bargain Outlet, with some firms expressing optimism about future growth prospects.
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