On Thursday, Truist Securities adjusted its price target for Ollie's Bargain Outlet (NASDAQ:OLLI), increasing it to $80 from the previous $78, while maintaining a Hold rating on the stock. The adjustment follows Ollie's announcement of a solid fourth quarter, which included a 3.9% increase in comparable store sales and gross margins (GMs) that have returned to historical norms.
The company's guidance for fiscal year 2024 aligns with expectations, projecting high single-digit unit growth, low single-digit comparable store sales, and approximately 10% to 15% growth in earnings per share (EPS). Truist Securities notes that Ollie's Bargain Outlet is experiencing robust deal flow and that its value proposition continues to attract consumer traffic, particularly among lower-income shoppers.
With supply chain costs normalizing, the company's gross margins have leveled out around 40%, which is considered standard for Ollie's. The analyst from Truist Securities believes that while the company's fundamentals are strong, the current stock valuation reflects a balanced risk/reward scenario, leading to the decision to maintain their Hold rating.
Truist Securities has also decided to keep its EPS estimates unchanged. The modest increase in the price target to $80 is reflective of the solid financial performance and outlook provided by Ollie's Bargain Outlet, as well as the recovery of gross margins to typical levels.
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