Five Below (FIVE – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Lorraine Hutchinson from Bank of America Securities reiterated a Sell rating on the stock and has a $75.00 price target.
Lorraine Hutchinson’s rating is based on several key factors impacting Five Below’s financial outlook. Despite positive developments such as a strong fourth-quarter performance and improvements in product assortment, the company faces significant challenges due to tariff pressures. With 60% of its cost of goods sold sourced from China, Five Below is vulnerable to tariff-induced gross margin pressure, which is expected to negatively impact earnings in fiscal years 2025 and 2026.
Additionally, the potential for multiple expansion is limited given the anticipated decline in earnings per share for 2025 and flat growth in 2026. While the company plans to open 150 new stores in 2025, this represents a slowdown from previous years, and capital expenditures have been reduced. Although there are efforts to drive comparable sales gains through new products and marketing initiatives, the overall financial pressures and lack of significant growth prospects contribute to the Sell rating.
Based on the recent corporate insider activity of 74 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.