Five Below’s Stock Price Target Cut (NASDAQ: FIVE) By Seven

No fewer than seven analysts came out with downward revisions on Five Below, as earnings failed to shift sentiment.

Morgan Stanley has revised its price target for Five Below, Inc. (NASDAQ: FIVE), maintaining an Equal Weight rating on the shares. The adjustment reflects a cautious stance due to anticipated margin pressures from tariffs expected to intensify through fiscal year 2025 and beyond.

Morgan Stanley analyst Simeon Gutman pointed to several driving factors behind Five Below's customer engagement, including product freshness, value, and merchandising efforts which remained prominent through the Holiday season leading into Q1. Despite these positive elements, the analyst highlighted the looming headwind of tariffs, which are deemed to present significant margin challenges for Five Below. This projection of increased tariffs is expected to contribute to a margin squeeze, escalating through FY25 and into FY26.

With a market capitalization of $4.19 billion, the stock sits near the low end of the 52-week range ($64.87 – $187.83), having fallen 56.95% over the past 12 months.

Five Below, headquartered in Philadelphia, Pennsylvania, operates as a specialty value retailer in the United States. The discount retailer is known for selling a diverse range of products, from accessories, beauty products, and home goods to tech items and seasonal merchandise. The company leverages a unique marketing strategy focused on products priced below five dollars to drive customer traffic and purchasing behavior among value-oriented shoppers.

Regarding financial health, Five Below's trailing P/E ratio is 15.65, with a forward P/E ratio of 15.59. The company has reported total revenue of $3.88 billion, with net income to common stockholders of $253.61 million. Institutional holders have a significant stake in the company with over 106.87% ownership.

Across the spectrum of twenty analysts offering opinions, Five Below holds a mean price target of $106.75 and an overall recommendation leaning towards ‘buy'. The diverse assessments reflect the ongoing evaluation of the company's market positioning and strategic initiatives amidst retail industry fluctuations and external economic pressures such as tariff impacts.

Morgan Stanley's adjusted price target for Five Below to $110 from $120 continues to reflect a very healthy perceived upside, despite prevailing conditions.

Other analysts to reduce on the day included Goldman Sachs ($102 from $117), UBS ($110 from $150), BofA ($75 from $88), Truist ($86 from $93), Barclays ($93 from $100), and Melius Research ($95 from $125). Whilst the targets have been revised to the downside, this is another case of the street continuing to see potential, albeit in a changing market.