Oppenheimer set a “strong selloff and EPS expansion” target on Investing.com

© Reuters. Five Below (FIVE): Target set at Oppenheimer on “strong sales and EPS expansion”

Oppenheimer’s Brian Nagel reiterated an “outperform” rating on Five Below ( FIVE ) and raised his price target on the stock to $235 from $165, noting that the “stars are aligning” for the company, which he now ranks “among the favorite mid-cap names” within coverage of consumer growth and e-commerce.”

The analyst highlights several strong upsides that FIVE can offer “growth-oriented investors navigating an uncertain consumer backdrop”:

1. The company’s “Triple Double” strategy to double sales and earnings per share by FY25 remains intact: “Management clearly indicates that while unexpected disruptions related to the pandemic affected trends in the first half of FY22, the underlying progress towards a triple double the plan is intact, with the realization of the goals probably only modestly delayed.”

2. Continued rollout of “Five Beyond” stores, seen as an “incremental comp driver”: “250 store conversions completed in 2022 and an estimated 400 set for 2023. By our math, Five Beyond conversions should lift the company’s total by 60–110 bps in 2023.”

3. Opportunities to potentially increase market share: “the ongoing struggles at now-bankrupt Party City could eventually lead to
the opportunity to increase market share of more than $800 million in select entertainment-related categories for FIVE.”

4. Compelling valuation at current price levels: “The 12-18 month price target of $235 is based on a mid-20s multiple applied to our newly established EPS forecast for FY25 (Jan. 2026) of $9.31, a level that represents a conservatively healthy discount to current trading parameters for the stock and reflects continued compelling and strong growth prospects for FIVE.”

In terms of the sum of factors, the analyst believes that “FIVE continues to successfully build its store base, increasingly capitalizing on the woes of a less well-positioned operator,” and “is optimistic that the growth premium currently placed on the stock will be sustained given strong sales and EPS expansion – a.”

Oppenheimer reiterates its “outperform” rating on the stock and raises its price target to $235.

FIVE shares are currently trading around $190 and are up over 10% year-to-date.

By Vlad Schepkov

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