KeyBanc maintained an Overweight rating on shares of Ollie's Bargain Outlet (NASDAQ: OLLI), with a steady price target of $105.00. The firm's positive stance is influenced by Ollie's strategic growth through store acquisitions and favorable market conditions for closeout merchandise.
Ollie's Bargain Outlet recently announced its successful bid for seven store leases previously owned by the bankrupt retailer BIG. This acquisition is part of a larger bankruptcy auction involving 143 stores, signaling a significant expansion for Ollie's retail footprint.
KeyBanc's analysis suggests that Ollie's is well-positioned to capitalize on the current market dynamics. The firm's channel checks have revealed a robust closeout buying environment, which is attributed to the challenging consumer sector and increasing bankruptcies, presenting opportunities for Ollie's to enhance its inventory with attractive deals.
This development comes as a reinforcement of Ollie's growth strategy, which has been focusing on increasing the number of its discount retail stores. The acquisition of the former BIG store leases is seen as a move that could potentially bolster Ollie's presence in the retail market.
In summary, KeyBanc's reiteration of the Overweight rating and the $105.00 price target underscores their confidence in Ollie's Bargain Outlet's business model and growth prospects, particularly in a retail environment that is currently yielding numerous closeout opportunities.
In other recent news, Ollie's Bargain Outlet Holdings Inc. has been the subject of several positive analyst reports following the bankruptcy filing of competitor Big Lots (NYSE:BIG). RBC Capital Markets raised the price target for Ollie's shares to $106, maintaining an Outperform rating, and projected an increase in sales and earnings per share due to the closure of Big Lots stores. Similarly, BofA Securities, Loop Capital, and KeyBanc Capital Markets have all maintained a Buy rating on Ollie's, raising their price targets to $115, $110, and $105 respectively.
Ollie's has also announced its successful bid to acquire seven store leases from the bankrupt Big Lots, with six locations already approved by the United States Bankruptcy Court for the District of Delaware. This expansion aligns with Ollie's growth plans and the recent establishment of a new distribution center in the Midwest.
Moreover, Ollie's reported robust financial results for the second fiscal quarter of 2024, with net sales increasing by 12% to $578 million and a 5.8% increase in comparable store sales. This led to an upgrade in the company's sales and earnings guidance for the year. Despite management's projection of flat comparable store sales for the third fiscal quarter of 2024, Loop Capital suggests this forecast may be conservative, reflecting their belief in Ollie's ability to deliver consistent sales growth.
InvestingPro Insights
Ollie's Bargain Outlet's recent strategic moves align well with several positive indicators from InvestingPro. The company's strong financial health is evident from its perfect Piotroski Score of 9, an InvestingPro Tip that suggests robust operational efficiency and financial stability. This score supports KeyBanc's confidence in Ollie's growth strategy and ability to capitalize on market opportunities.
The company's revenue growth of 14.15% over the last twelve months and a significant EBITDA growth of 33.69% in the same period underscore its successful expansion efforts. These metrics align with KeyBanc's positive outlook on Ollie's ability to leverage the current closeout buying environment.
Another InvestingPro Tip reveals that Ollie's is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.8. This suggests that the stock may be undervalued considering its growth prospects, which could include the potential benefits from the newly acquired store leases.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into Ollie's Bargain Outlet's financial position and market performance.
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