In a report released on May 2, Lorraine Hutchinson from Bank of America Securities reiterated a Sell rating on Five Below (FIVE – Research Report), with a price target of $78.00.
Lorraine Hutchinson’s rating is based on several factors that impact Five Below’s financial outlook. Despite a strong start to the year with better-than-expected first-quarter results, the company faces significant challenges due to its reliance on sourcing from China. The tariffs on goods from China are expected to exert pressure on the company’s gross margins, which could negatively affect earnings beyond the first quarter.
Additionally, while Five Below has managed to mitigate some of the tariff impacts through vendor collaboration and price adjustments, the potential for further tariff increases poses a substantial risk. The company’s efforts to diversify sourcing and focus on new products may not be sufficient to fully offset the impact of tariffs if a trade deal is not reached soon. Consequently, Hutchinson maintains a Sell rating, as the potential for earnings growth is constrained by these external pressures, and the stock’s valuation does not justify a higher multiple.
According to TipRanks, Hutchinson is a 4-star analyst with an average return of 6.3% and a 54.29% success rate. Hutchinson covers the Consumer Cyclical sector, focusing on stocks such as Tapestry, Nike, and TJX Companies.