Five Below (FIVE) can sustain healthy growth even its growth mix shifts, while investor focus remains centered on 2027 and whether the company can maintain positive comparable sales growth against the solid gains recorded so far this year, UBS Securities said in a note emailed Friday.
UBS said its checks suggest that Five Below's underlying momentum is more durable than the market gives it credit for, despite the fading benefit from unique product trends.
The company is making operational improvements as it optimizes its product assortment, improves the in-store experience, and invests further in marketing, according to the note.
Five has notably shifted its online assortment toward the $5 to $10 price range in recent months, with these items increasing from nearly 24% of the product mix in June to 40% in October, the brokerage said.
The shift toward higher-priced merchandise and average price growth is supporting a re-acceleration in ticket growth at Five Below, the brokerage added.
UBS kept its buy rating on Five Below with a price target of $325.
Price: 224.62, Change: +1.39, Percent Change: +0.62
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