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Deutsche Bank Cuts Price Target On Five Below

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Deutsche Bank cut its price target on Five Below Inc (NASDAQ: FIVE) from $46 to $43 and maintained a Buy rating after the company reported disappointing holiday sales.

“While an easy compare in January remains ahead (and the company is assuming comps in-line with the QTD trend), FIVE’s 2-year stack trend has materially slowed to ~3 percent in 4Q from the 10 percent YTD average, presenting concerns that the concept is losing appeal,” according to analyst Paul Trussell.

“We too are frustrated with the volatile top-line performance, but see the Holiday period as the company’s Achilles’ heel that can be improved over time, as opposed to a red flag on the business overall. To this end, comps were weakest in 4Q in three of the past four years.”

Trussell believed “FIVE’s merchandising approach during Holiday may need to be altered in order to make the store more of a destination, with a greater emphasis on unique gifts. In fact, management noted that the comp shortfall this 4Q was driven from a lull in traffic post Black Friday through mid-December, with sales not picking back up until the immediate days ahead of Christmas.”

The analyst note concluded that “FY15 EPS goes to $1.10 from $1.13 on 4.3 percent SSS and slight margin expansion on sales leverage; however, we do see double-digit store growth potential driving ~25 percent average EPS growth over the next few years.”

Five Below recently traded at 35.83, down 17.88 percent.

Latest Ratings for FIVE

DateFirmActionFromTo
Oct 2019MaintainsBuy
Oct 2019Initiates Coverage OnOutperform
Sep 2019MaintainsOutperform

View More Analyst Ratings for FIVE
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Paul TrussellAnalyst Color Price Target Analyst Ratings

 

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