On Thursday, UBS analyst Michael Lasser adjusted the price target for Five Below stock (NASDAQ:FIVE) to $110 from the previous $150 while sustaining a Buy rating on the company’s shares. The revision reflects a cautious but optimistic outlook for the discount retailer, which is currently navigating through several challenges, including the impact of tariffs. The stock, trading at $80.35, has experienced significant pressure with a -27.98% year-to-date return. According to InvestingPro analysis, Five Below shows several signs of financial resilience despite market headwinds.
Lasser noted that Five Below is actively working on a turnaround strategy, despite the headwinds faced in the current year. The company is making strides in refreshing its product offerings and delivering value to customers, which has begun to show positive signs. Comparable store sales (comps) are performing in accordance with the first quarter guidance of 0-2%, a notable improvement from the -3% seen in the fourth quarter. The company maintains strong fundamentals with revenue growth of 8.91% and a healthy current ratio of 1.79, as reported by InvestingPro.
The retailer has received favorable customer responses in areas where it has focused its efforts, such as the beauty category. Lasser emphasized that merchandising is critical to Five Below’s success and that the company’s ongoing adjustments, including transitioning to whole pricing from fractional pricing, are aimed at simplifying its value proposition for shoppers.
Investments in employee wages and labor hours are part of Five Below’s strategy to enhance the in-store experience in 2025. Additionally, the company is ramping up its marketing initiatives, highlighted by the appointment of Jacob Hawkins (NASDAQ:HWKN) as the new Chief Marketing Officer. These marketing efforts are expected to bolster brand awareness and stimulate customer demand.
Five Below’s commitment to its turnaround plan and the initial positive indicators from its strategies suggest a path forward for the retailer as it seeks to navigate through the current retail landscape. Trading at a P/E ratio of 16.38, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, potentially offering an attractive entry point for investors seeking value opportunities. Discover more insights and 6 additional ProTips about Five Below with an InvestingPro subscription.
In other recent news, Five Below has reported its fourth-quarter earnings, which have sparked various analyst reactions. The company exceeded expectations in both comparable sales and earnings per share, but ongoing tariff issues are causing concern. Guggenheim maintained a Buy rating but lowered the price target to $125, citing conservative earnings guidance due to tariff-related margin pressures. Truist Securities also reduced its price target to $86 and maintained a Hold rating, highlighting the company’s efforts to adjust its merchandise mix in response to tariffs. Meanwhile, KeyBanc reiterated a Sector Weight rating, noting the complexity tariffs add to Five Below’s turnaround efforts.
Mizuho Securities cut its price target from $105 to $88, maintaining a Neutral rating, and noted the company’s strategy to refine its product assortment in response to strong consumer demand. Evercore ISI, on the other hand, slightly increased its price target to $93 while keeping an In Line rating, acknowledging the company’s focus on returning to its core strengths to overcome challenges. Analysts are keeping a close watch on Five Below’s strategic responses to tariffs and their potential impact on earnings, as these factors continue to shape investor sentiment.
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