UBS Reiterates Buy on Five Below (FIVE) Following 2Q Report
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UBS reiterated a Buy rating and $55.00 price target on Five Below (NASDAQ: FIVE) following the company's 2Q earnings report. following the company's 2Q earnings report. FIVE reported EPS of $0.18. ahead of consensus' estimate of $0.17. The outcome was driven by 50 bps of GM expansion, which was above the 20 bps forecast.
Analyst Michael Lasser commented, "While FIVE’s 3.1% comp was a bit softer than our 4.0% (& the 3.4% cons.), the result was consistent w. its guidance & its LT algorithm. The fact that traffic was down in the Q & the comp was driven by a rise in ticket will capture some attention. But, we think this was heavily influenced by the uncooperative weather in many of its markets to start the Q (~50% of its stores are in the mid-Atlantic / NE). Plus, we think its results were better in June / July. Further, it guided to a 1-2% comp for 3Q, but this is on a tougher compare. So, the 2-year stacks are holding steady in the 6-7% range. Assuming it can sustain this level through the end of the year, we estimate it could generate a ~3% comp in the ever important 4Q (when it generates ~70% of its FY EPS). We believe a healthy outlook for the holiday makes this a compelling stock idea into end of the year and beyond."
Shares of Five Below closed at $44.56 yesterday.
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