Five Below's Growth Momentum Seems Sustainable, UBS Says

MT Newswires Live04-22

Five Below (FIVE) displayed robust growth, with comparable sales increase of 15.4% in Q4 and 14% to 16% Q1 guidance, and the momentum seems sustainable, UBS Securities said in a note emailed Tuesday.

UBS believes the strong performance is driven by improved execution in terms of inventory, merchandising, and staffing, capitalization on social media trends, like-for-like price changes with data showing that its best selling stock keeping units sell at a 5% higher price than prior year, and select strength in product categories such as beauty dupes and collectibles, according to the note.

The brokerage said Five Below is very well positioned to outperform its outlook. The company is planning to boost its marketing investment after high returns in 2025 as it shifted spend towards digital channels, the firm noted, adding that this allows Five Below to better target its existing customer base.

If the company exceeds current guidance significantly, UBS said the shares would be underpriced. Beyond 2026, Five Below is well set to continue compounding top-line growth for an extended period, the brokerage added.

UBS maintains a buy rating on Five Below with a price target of $285.

Price: 239.80, Change: -7.91, Percent Change: -3.19

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment