Five Below (FIVE) PT Raised at Bernstein Following a 'Sizable Beat And Raise'

Bernstein SocGen Group analyst Zhihan Ma raised the price target on Five Below (NASDAQ: FIVE) to $173.00 (from $162.00) while maintaining a Market Perform rating.

The analyst commented: "Sizable beat and raise; all eyes on Q4 and FY26; Five Below delivered a strong beat in Q3 against high expectations. Comp was 14.3%, vs. previous guidance of 5-7% and sellside consensus of 7.3%. The strong result was equally led by traffic and ticket. Adjusted gross margin came in -30bps below consensus hurt by tariff costs. However, adjusted EBIT margin of 4.3% was a 290bps beat given strong operating leverage. Adj. EPS of $0.68 was a 44c beat.

Given the recent momentum, FIVE’s FY25 guidance could still be conservative. Although the company expects headwinds from tariffs and incentive comp, should it comp in the HSD-LDD range, these could be partly offset by strong operating leverage. However, the real test comes next year as one-time tailwinds from price increases, Temu’s pullback, the Labubu craze etc. dissipate. We see meaningful upside potential if FIVE generates LSD% comp next year and re-accelerates unit growth. Conversely, we see downside if comp goes negative and we see further unit growth decel."

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