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On Tuesday, Telsey Advisory Group adjusted its price target for Five Below stock, lowering it to $85 from the previous $115, while maintaining a Market Perform rating on the shares. Currently trading at $74.37, the stock has experienced significant pressure, down 29% year-to-date according to InvestingPro data. The revision comes as the firm holds steady on its projections for the fourth quarter of fiscal year 2024, which align with the company’s reported performance.
Joseph Feldman of Telsey highlighted that the current price target reflects several factors impacting Five Below. These include challenging macroeconomic conditions, consumer spending trends, some merchandising errors, and a shorter holiday selling period. Despite these headwinds, the company’s earnings per share (EPS) are anticipated to see a decline of 7.5% to $3.38. InvestingPro data shows the company maintains healthy revenue growth of 14.3% over the last twelve months, with its next earnings report scheduled for March 19, 2025.
Five Below previously shared its holiday season results at the ICR Conference 2025 held in January, reporting a comparable store sales (comp) decrease of 3.2%. This figure was slightly better than Telsey’s projected range of a 3.5% to 4.0% drop. As a result of the holiday performance, Five Below upgraded its sales forecast to the upper half of its prior guidance, which ranges between $1.35 billion and $1.38 billion, with a comp decline of 3.0% to 5.0%.
The updated sales outlook by Five Below indicates that the company’s performance, despite a challenging environment, managed to exceed some of the initial expectations. This update to the sales guidance reflects the company’s resilience in navigating the shortened holiday season and the broader difficult economic landscape.
Investors and stakeholders of Five Below (NASDAQ: FIVE) will be keeping a close watch on the company’s performance as it contends with the outlined challenges and strives to meet its adjusted sales targets for the quarter. According to InvestingPro analysis, the stock appears undervalued at current levels, with multiple ProTips and a comprehensive Fair Value analysis available to subscribers. For deeper insights into Five Below’s valuation and growth prospects, access the detailed Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.
In other recent news, Five Below Inc (NASDAQ:FIVE). reported an 8.7% increase in net sales for the holiday period, reaching $1.19 billion, although comparable store sales saw a 3.2% decline. The company has maintained its guidance for the fourth quarter, expecting sales to be in the upper half of its previously stated range, with an earnings per share (EPS) forecast of $3.23 to $3.41. Analysts from Loop Capital and Citi have adjusted their price targets for Five Below, lowering them to $75 and $80, respectively, while maintaining a Hold and Neutral rating on the stock. These adjustments reflect concerns over macroeconomic conditions and the impact of tariffs on the company’s operations.
KeyBanc also retained a Sector Weight rating, noting the 3.2% decline in comparable store sales during the holiday season as consistent with expectations. Truist Securities reaffirmed its Hold rating, highlighting the company’s holiday sales growth and ongoing challenges with margins. The new CEO, Winnie Park, is anticipated to focus on merchandising strategies, with significant changes expected to take effect in the latter half of 2025.
Despite these challenges, Executive Chairman Tom Vellios expressed satisfaction with the holiday performance, aligning with company expectations. As Five Below continues to navigate a challenging retail environment, its management is committed to enhancing product offerings and the in-store experience. Investors will be closely monitoring the company’s upcoming earnings report and strategic direction under new leadership.
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