Analyst: Five Below Hits Its Stride With December Foot Traffic

Investors looking to identify a retailer with positive holiday shopping performance may want to take a closer look at Five Below Inc FIVE.

The Analyst

Morgan Stanley's Vincent Sinisi maintains an Equal-Weight rating on Five Below's stock with a price target raised from $54 to $58.

The Thesis

Five Below's performance during Black Friday was mostly in-line versus last year's performance based on Sinisi's store checks, the analyst said in a research report. (See Sinisi's track record

But similar store checks throughout December found "considerable build" throughout the month, including the all-important two-week period leading up to Christmas.

Following the analyst's favorable store checks, the retailer is expected to post a fourth-quarter comp increase of 7 percent, above a prior estimate of 5 percent and management's own guidance of 4 to 6 percent.

Five Below has historically outperformed when there is strong demand for at least one highly trending item like fidget spinners, Sinisi said. No one such item existed this year, but the retailer nevertheless benefited from "broad-based product strength," he said. 

Five Below is expected to present at the ICR Conference Monday, Jan. 8.

"We would not be surprised to hear a [Q4] update from management ahead of ICR, likely in early January," Sinisi said. 

Price Action

Shares of Five Below are up nearly 70 percent since the start of 2017 and were trading up slightly Wednesday morning at $67.80.

Related Links:

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Photo by Ildar Sagdejev/Wikimedia.