Truist adjusts Five Below shares target, still bullish amid Q4 challenges
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On Thursday, Truist Securities adjusted the price target for Five Below (NASDAQ:FIVE) shares, a specialty discount retailer, to $204 from the previous target of $214 while sustaining a Buy rating. The adjustment follows the company’s fourth-quarter performance, which saw comparable store sales align with revised forecasts, attributed to customer transactions and the expansion of the Five Beyond format.
The earnings per share (EPS) for the quarter, however, fell short of expectations due to higher than anticipated losses from inventory shrinkage, estimated to impact the quarter by approximately $0.20. The analyst noted that while first-quarter sales and comps are projected to meet expectations, EPS will likely be affected by additional costs related to shrink mitigation, primarily labor, and the impact of a calendar shift.
Despite these pressures, the analyst remains optimistic, suggesting that the shrink issue might be overstated as no improvement in the rate of shrinkage is expected, yet costs for mitigation efforts are being incurred. Additionally, the analyst forecasts that the 52-week comparison for EPS will show an approximate growth of 14%-15%, with the potential for further upside.
