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On Friday, RBC Capital Markets adjusted the price target for Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) to $133.00, up from the previous target of $130.00, while reiterating an Outperform rating on the stock. Currently trading at $105.25 with a P/E ratio of 31x, InvestingPro data shows the stock is trading at a premium to its calculated Fair Value. The revision comes as the company announced the acquisition of 40 additional store leases from Big Lots (NYSE:BIG), prompting RBC Capital to update its unit and pre-opening expense estimates.
The analyst at RBC Capital highlighted the strength of Ollie’s underlying business, suggesting a positive risk-to-reward scenario as the company approaches its earnings report on March 19. With an InvestingPro Financial Health Score of 2.81 (GOOD) and impressive revenue growth of 12.48% over the last twelve months, the company shows robust fundamentals. The firm’s model projects a 3% increase in comparable store sales for the fourth quarter, slightly above the consensus estimate of 2.5%, and an adjusted earnings per share (EPS) of $1.22, compared to the consensus of $1.19. The new price target is based on approximately 30 times RBC Capital’s revised 2026 adjusted EPS estimate of $4.44, up from the prior estimate of $4.34.
RBC Capital’s analysis suggests that even without market share gains from Big Lots, Ollie’s could generate an EPS of around $3.80. Operating with a healthy current ratio of 2.91 and a return on equity of 14%, the company demonstrates strong operational efficiency. The firm believes that the company’s strong fundamentals support a near-term multiple of about 27 to 28 times, indicating limited downside risk at the current stock price levels. Conversely, with modest market share gain assumptions, the EPS could reach $3.90 to $4.00, which at a peak multiple of approximately 30 times, translates to a stock value of $117 to $120, representing an implied upside of 12 to 15% from current levels.Discover more insights and 8 additional key ProTips for OLLI with an InvestingPro subscription, including detailed valuation metrics and comprehensive financial analysis.
The analyst also anticipates that Ollie’s management will provide some directional insight into the sales impact at stores located near the closed Big Lots locations. RBC Capital’s channel checks indicate that around 70% of those stores have reported an increase in customer traffic following the Big Lots closures. Additionally, some Ollie’s locations are offering discounts of about 15% to Big Lots members, which could further contribute to the company’s performance.
Investors are watching closely as Ollie’s stock responds to these developments, with the company’s strategic acquisitions and potential for increased market share positioning it favorably in the retail sector.
In other recent news, Ollie’s Bargain Outlet has been the focus of several analyst reports and strategic developments. KeyBanc has maintained an Overweight rating on Ollie’s shares, citing the company’s acquisition of 40 former Big Lots store leases as a significant growth opportunity. This acquisition is part of a larger expansion plan, with Ollie’s aiming to open approximately 75 new stores in 2025, which is expected to positively impact sales and earnings per share (EPS). Meanwhile, Jefferies downgraded Ollie’s stock from Buy to Hold, lowering the price target to $111, due to concerns over inventory growth and the challenges posed by upcoming comparisons.
Additionally, Ollie’s has announced leadership changes, with Eric van der Valk taking over as President & CEO, while John Swygert transitions to Executive Chairman of the Board. RBC Capital Markets has retained an Outperform rating, highlighting the potential impact of Big Lots store closures on Ollie’s performance and suggesting a possible increase in unit growth. Furthermore, JPMorgan has reaffirmed an Overweight rating, projecting a potential upside in fourth-quarter comparable store sales due to factors such as weather-related demand and shifts in consumer spending patterns.
Both RBC and JPMorgan have expressed confidence in Ollie’s growth trajectory, with RBC modeling EPS estimates of $3.91 for 2025 and $4.34 for 2026, and JPMorgan projecting EPS of $3.78 for FY25 and $4.22 for FY26. These developments reflect a mix of optimism and caution among analysts regarding Ollie’s strategic initiatives and market conditions.
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