UBS Raises Price Target on Five Below (FIVE) to $48 Following 1Q EPS Beat
UBS reiterated a Buy rating on Five Below (NASDAQ: FIVE), and raised the price target to $48.00 (from $47.00), following the company's 1Q earnings report. FIVE reported an EPS of $0.12, ahead of the consensus estimate of $0.10. The company also generated 100 bps of OPM expansion to 5.6%, beating the consensus estimate of 4.8%.
Analyst Michael Lasser commented, "Given the jagged retail environment in 1Q, we think FIVE’s results support many key points in its investment case. Its 4.9% comp exceeded the cons. est. of 4.2% & its guidance of 4% (translating into solid stacked comps). Notably, its strength was broadbased & driven by increases in transactions & avg ticket. Importantly, its new store productivity was 107% in 1Q, up from 105% in 4Q. FIVE noted that 5 of its 10 best spring openings occurred in 1Q'16. Interestingly, these locations varied in geography (MO, LA, KY, WV, & DE), illustrating the strength of the concept outside of its home base. The breadth of this strong performance provides evidence that the ultimate sales productivity of its units can move well north of its recent $2m per box. Plus, it substantiates our view FIVE can operate more than 2k stores over time. These are the eventual drivers of its share price, which should move significantly higher over the LR."
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Shares of Five Below closed at $42.85 yesterday.