Truist Securities maintains buy rating on Ollie's Bargain Outlet stock

Truist Securities reaffirmed a Buy rating for Ollie’s Bargain Outlet (OLLI), setting a price target of $126, while the stock currently trades around $111.45. First quarter sales are expected to align with forecasts, but initial second quarter data suggests sales are trailing expectations; however, Truist anticipates a potential re-acceleration in July as comparisons become more favorable, and suggests investors consider buying on any potential pullback. Other analysts, including RBC Capital Markets, KeyBanc Capital Markets, UBS, and Piper Sandler, also maintain positive outlooks, citing Ollie's strategic positioning and potential market share gains from Big Lots store closures.

Analysis

Ollie’s Bargain Outlet (OLLI) has received a reaffirmed Buy rating from Truist Securities with a $126 price target, while the stock currently trades around $111.45, reflecting a significant 35% return over the past year. Analyst price targets for OLLI generally range from $105 to $137. First-quarter sales are expected to meet the forecast of a 2.0% comparable sales increase and total sales of $561 million, following an initial soft start that accelerated in late March and April before easing. However, initial data for the second quarter suggests sales are currently trailing both the first quarter's exit rate and analyst projections, primarily due to tougher prior-year comparisons in May (+10%) and June (+13%). These challenging comparables are expected to ease substantially in July (prior year -10%), leading Truist to anticipate a potential re-acceleration in sales growth. This optimism is shared by other firms; RBC Capital Markets maintains an Outperform rating ($133 target) and projects an EPS of $0.74 for the upcoming quarter, citing benefits from Big Lots (BIGGQ) store closures. KeyBanc Capital Markets holds an Overweight rating ($135 target), also noting upside potential from market activities. UBS adjusted its target to $123 following strong Q4 results (2.8% same-store sales growth), and Piper Sandler, despite a slight target reduction to $124, maintains an Overweight rating, emphasizing market share gains from Big Lots' liquidation and a strong 2025 outlook. While InvestingPro data indicates a "GOOD" financial health rating for Ollie's, its Fair Value analysis suggests the stock is slightly overvalued at current levels, providing a counterpoint to the generally bullish analyst consensus.

Key Decisions for Investors

• Consider accumulating OLLI shares on any potential price pullbacks, as suggested by Truist Securities, particularly anticipating a sales re-acceleration in July due to more favorable prior-year comparisons.
• Closely monitor Ollie's upcoming second-quarter sales results, as initial data points to a potential near-term slowdown against challenging comparables before the expected July improvement.
• Evaluate the company's execution in capitalizing on market share opportunities arising from competitor weaknesses, such as Big Lots' store closures, as this is a significant driver for the positive analyst ratings and future growth projections.
• Balance the strong analyst consensus and price targets (ranging $105-$137) against the stock's substantial 35% year-to-date rally and InvestingPro's assessment of slight overvaluation when making investment decisions.