Five Below Faces Margin Pressures and Leadership Uncertainty Amidst Tariff Challenges, Leading to Sell Rating

Lorraine Hutchinson, an analyst from Bank of America Securities, reiterated the Sell rating on Five Below (FIVE – Research Report). The associated price target was raised to $93.00.

Lorraine Hutchinson’s rating is based on several factors that suggest potential challenges for Five Below. Despite strong sales in the first half of the year, the company is expected to face margin pressures in the second half due to increased tariffs and higher SG&A expenses. This is compounded by the departure of the CFO, which may create some uncertainty in financial leadership.
Additionally, while the company has implemented mitigation strategies to address the tariff impact, these efforts are expected to result in a net negative effect on gross margins. The valuation concerns are further highlighted by the price objective being set at $93, which is significantly lower than the current stock price of $121.24. Consequently, Hutchinson maintains a Sell rating, as the potential for earnings growth appears limited in the near term.

Based on the recent corporate insider activity of 78 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of FIVE in relation to earlier this year.