On Wednesday, RBC Capital maintained its positive stance on Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI), reiterating an Outperform rating alongside a steady $86.00 stock price target. The firm's outlook remains optimistic despite acknowledging some mixed results in the recent quarter, which were not seen as altering the fundamental investment thesis for the company.
The analyst from RBC Capital expressed a slightly more conservative view on the comparable store sales (comp sales) forecast for the fiscal year 2024, while still anticipating the possibility of Ollie's outperforming on gross margins.
This, in turn, could lead to earnings per share (EPS) at the higher end or potentially above the projected range. For the fiscal year 2024, RBC Capital has adjusted its comp sales growth estimate to 1.1% from 0.9%, increased its net sales growth projection to 7.3% from 6.5%, and maintained its EPS forecast at $3.24.
Looking further ahead, RBC Capital introduced its fiscal year 2025 forecasts, predicting comp sales growth of 2%, net sales growth of 9.9%, and an EPS of $3.61. The valuation has been rolled forward one year, with the price target being maintained based on a 24 times multiple of the fiscal year 2025 EPS estimate, a figure that has been adjusted to align with the historical median.
The firm's analysis suggests that while there are factors that warrant caution, the potential for Ollie's to exceed expectations in certain financial metrics underpins the maintained price target and optimistic rating. The unchanged $86.00 stock price target reflects a steady confidence in the stock's performance potential over the coming years.
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