Five Below Has 16% Upside

Buckingham Research reiterated its Buy rating on Five Below Inc FIVE. The brokerage also boosted its price objective to $50 from $45 implying 16 percent potential upside from current levels.

The analyst opinion comes on the heels of Five Below reporting yet another quarter of solid results that underscored by a +4.9 percnet comp, ~110 percent NSP and EPS growth of 55 percent, demonstrating the power and consistency of its unique business model.

Halso believes several trends continue to work in Five's favor, underscoring the company's nimble merchandise tactics, as well as ability to deliver above plan results despite a difficult retail backdrop.

As far as the near-term, the brokerage said, "we believe the company is rightly staying conservative around 2Q comp guidance of ~3% and we see potential upside given the post-Memorial Day time period is more meaningful to 2Q relative to May and comparisons ease in June and July as we lap the pulling of a key mailer LY."

For the longer-term, the investment firm said, "we remain confident in FIVE's financial plan calling for 20% sales growth and 20%+ EPS growth annually through 2020. FIVE remains one of the most unique and compelling growth stories in retail with a long runway to grow to 2,000 stores over time (1Q16: 458) and industry leading NSP of 100%+ apart from solid merchandise capabilities enabling FIVE to "chase" into trends."

At current levels, the analyst believes the risk/reward is favorable with 15 percent downside/30 percent upside.

Shares of the company traded 1.40 percent higher on Friday.