Jefferies Reiterates On Five Below, 'Had A Good Holiday Season'

Jefferies commented on Five Below Inc FIVE Wednesday and reiterated its Buy rating and $52 price target.

Analyst Daniel Binder noted that it “looked like management set the bar low for Q4 at a 4 percent comp even after coming in better than expected in Q3.

“Based on our field checks, we think the company had a good holiday season and should be able to beat the 4 percent forecast. We believe the company benefited from a strong product offering, strong value and better weather conditions y-y.”

Binder commented that “seasonal sell-through appeared strong, and key categories like toys, beauty and technology (particularly mobile phone cases) appeared to be strong. Frozen movie related product also appeared to do well.”

The firm maintained its 6 percent comp store sales forecast and $0.63 EPS. Guidance is for a 4 percent comp and EPS of $0.59-$0.62. The Street estimates are for a 5.1 percent comp and $0.61 EPS.

The $52 price target was “based on FIVE selling at a PEG ratio of 1.5 using FY17 EPS estimate of $1.40. This reflects strong unit growth and new store productivity with rapid cash payback and strong returns,” according to Binder.

Five Below Inc recently traded at $42.47, up 5.33 percent.