Jefferies Downgrades Five Below (FIVE) to Hold Amid Valuation Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2h ago
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Source: seekingalpha
- Rating Downgrade: Jefferies has downgraded Five Below (FIVE) from Buy to Hold due to its valuation being significantly above the three-year average, anticipating multiple compression as comparable sales growth normalizes back to long-term trends.
- Sales Performance: Although Five Below reported comparable sales growth of 7.1%, 12.4%, and 14.3% in the first three quarters, with a projected 14.5% in Q4, analysts warn that tougher year-over-year comparisons may hinder sustained growth.
- Management Outlook: The management has raised its full-year comparable sales outlook to 12.5%, up from the previous range of 3% to 5%, reflecting the successful merchandising strategy under CEO Winnie Park's leadership that has driven sales momentum.
- Market Reaction: Following the downgrade, Five Below (FIVE) shares fell 1.8% in premarket trading, indicating market concerns about future growth prospects, particularly as the company faces higher comparative baselines and sales pressures ahead.
Analyst Views on FIVE
Wall Street analysts forecast FIVE stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for FIVE is 162.31 USD with a low forecast of 110.00 USD and a high forecast of 187.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
19 Analyst Rating
9 Buy
9 Hold
1 Sell
Moderate Buy
Current: 203.610
Low
110.00
Averages
162.31
High
187.00
Current: 203.610
Low
110.00
Averages
162.31
High
187.00
About FIVE
Five Below, Inc. is a specialty value retailer offering merchandise targeted at the tween and teen demographics. Its assortment of products, including select brands and licensed merchandise. It is engaged in offering a group of products, including leisure, fashion and home, and snacks and seasonal. Leisure includes items such as sporting goods, games, toys, tech, books, electronic accessories, arts and crafts, and party. Fashion and home include items, such as personal accessories, attitude t-shirts, beauty offerings, home goods and storage options. Snack and seasonal include items, such as seasonal goods, greeting cards, candy and other snacks, and beverages. It also offers its merchandise on the Internet, through its fivebelow.com e-commerce Website, offering home delivery and the option to buy online and pick up in store. It also sells its merchandise through on-demand third-party delivery services to enable its customers to shop online and receive convenient delivery.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
