Morgan Stanley Bullish On Five Below's Long-Term Store Growth Trajectory


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Five Below Inc (NASDAQ:FIVE)'s rapid ascension does not appear to be slowing down anytime soon, according to Morgan Stanley. 

The Analyst 

Morgan Stanley analyst Vincent Sinisi reiterated an Equal-weight on Five Below and raised the price target from $78 to $94.

The Thesis

Discount retail continues to be one of the brightest spots in the sector. Five Below's performance is a prime example, with shares up over 46 percent year-to-date. (See the analyst's track record here.) 

A sustained period of productive store growth and consistently strong operating results gives Sinisi increased confidence in Five Below's robust growth trajectory, the analyst said. 

Morgan Stanley increased its long-term store growth forecast from 2,000 to 2,500 by 2035.

Five Below’s first quarter was its most productive as a public company, and the company continues to be among the best in new store productivity among Morgan Stanley’s coverage, the analyst said. 

A new Five Below store costs $300,000 but generates an EBITDA of $450,000 on average in the first year, Sinisi said. The analyst forecast 90-percent long-term new store productivity.

The company also seems to be shaking its gimmick-driven retail perception.

“With no clear trend established in 2018, we think a strong, widespread merchandising assortment can smooth comp performance and shift the perception of FIVE from a fad-driven retailer to a more consistent comp story, especially as brand awareness efforts continue to gain traction," Sinisi said. 

Price Action

Five Below shares were trading down 0.87 percent before the close Wednesday at $97.73. 

Related Links:

Wall Street Weighs In On Five Below's Q1 Earnings

Stifel: Nike 'Uniquely Positioned' In Shift To Direct-To-Consumer

Photo via Wikimedia. 


27% profits every 20 days?

This is what Nic Chahine averages with his options buys. Not selling covered calls or spreads... BUYING options. Most traders don't even have a winning percentage of 27% buying options. He has an 83% win rate. Here's how he does it.


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Posted In: Analyst ColorNewsPrice TargetReiterationAnalyst RatingsMorgan StanleyretailVincent Sinisi