Ollie's Bargain Outlet rose early before retreating Wednesday after the bargain retailer received a bullish double upgrade and price target increase, that represents around 16% upside, based on the outfit's potential to take advantage of expected tariffs under President-elect Donald Trump.
Citi analyst Steven Zaccone on Wednesday upgraded Ollie's Bargain Outlet stock to a buy rating, up from his previous sell designation. Zaccone more than doubled his price target on OLLI to 133 from 64. That would mark a further 16% upside on OLLI stock.
The Citi analyst wrote that Ollie's Bargain Outlet is "well positioned to win in the uncertain retail landscape" and that the "treasure hunt" shopping experience resonates with today's consumers as they search for value. Zaccone added that the retailer's "agile" buying organization is set to capitalize on merchandise "disruption from retail closures, supply chain and tariffs turmoil."
OLLI shares jumped early, hitting 118.47 intraday, before edging down 0.4% to 114.49 during market action on Wednesday. The stock advanced 0.5% to 114.94 on Tuesday. On Dec. 10, OLLI blasted past a 102.83 buy point after reporting mixed third-quarter earnings and revenue. Shares are now extended from that entry.
The stock has gained around 50% in 2024. Shares are about 7% below the all-time high of 123.52 from early 2021.
Ollie's Bargain Outlet Earnings
The retailer posted Q3 adjusted earnings per share of 58 cents, up 14% from a year ago and a penny ahead of estimates. Sales rose 7.8% to $517.4 million, shy of $519.5 million estimates. Same-store sales, which rose 7% in the year-ago quarter, slipped 0.5% from a year ago vs. flat expectations, according to FactSet.
"We delivered strong earnings on higher sales, gross margin, and disciplined expense control," CEO John Swygert said. He noted that Ollie's "took advantage of a number of real estate opportunities that strengthened our new store pipeline and enhanced our competitive positioning."
Ollie's stood by its full-year EPS outlook, but slightly pared its sales outlook. Same-store sales are now seen rising 2.7% to 3% from a year ago, down from the prior 2.7% to 3.2% range.
In the aftermath of earnings last week, OLLI received around 11 price target hikes from analysts.
On Dec. 11, Craig-Hallum analyst Jeremy Hamblin raised that firm's price target to 130 from 107. Hamblin wrote that investors are buying the stock as "the growth algorithm is ticking higher with real estate opportunities plentiful and a more aggressive posture from management to acquire leases from bankrupt retailers."
Olli stock has an 84 Composite Rating out of a best-possible 99. Shares also have an 89 Relative Strength Rating and a 75 EPS Rating.
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