Five Below Stock Soars on Fresh Bull Note

Most analysts are already upbeat toward Five Below

Oct 4, 2019 at 9:49 AM
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William Blair initiated coverage on Five Below Inc (NASDAQ:FIVE) with an "outperform" rating, saying the company creates a "unique" experience for young shoppers, and cited an "attractive" financial backdrop and "solid" cash flow. Additionally, the analyst in coverage forecast high-teen to low 20% annual revenue growth for the discount retailer.

Most analysts are already bullish on FIVE stock, with 12 of the 16 in coverage maintaining a "buy" or better rating. Plus, the average 12-month price target of $140.58 is a 13.1% premium to Thursday's close at $124.33.

However, pessimism has been cropping up elsewhere on Wall Street. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Five Below's 10-day put/call volume ratio of 2.98 ranks in the 95th annual percentile, meaning puts have been bought to open over calls at an accelerated clip.

Echoing this spike in skepticism, short interest jumped 22.9% in the latest reporting period to 3.15 million shares. These bearish bets account for a healthy 5.8% of FIVE stock's available float, or nearly three days' worth of pent-up buying power, at the average pace of trading. This could create tailwinds for the retail stock, should some of the weaker bearish hands start to throw in the towel.

Looking at the charts, FIVE shares have surged nearly 26% since their early August lows below $103. Plus, the stock's recent pullback from its mid-September peak around $138 was contained by its 200-day moving average. Today, Five Below stock is up 3.8% to trade at $129, putting the retailer on track to snap its two-week losing streak.


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