Five Below (FIVE): Upgrading to Outperform - Improved fundamentals beyond the Squishy hype

Research evidence excerpt

Five Below (FIVE): Upgrading to Outperform - Improved fundamentals beyond the Squishy hype

21 July 2026

Rating Upgrade

Zhihan Ma, CFA

+1 917 344 8303

US Retailing Broadlines & Hardlines zhihan.ma@bernsteinsg.com

Five Below Inc. Jeremy Miles, CFA

+1 917 344 8370

Rating jeremy.miles@bernsteinsg.com

Outperform (Market-Perform OLD)

Price Target

FIVE 250.00 USD (247.00 OLD)

Five Below (FIVE): Upgrading to Outperform - Improved

fundamentals beyond the Squishy hype

We upgrade Five Below (FIVE) to Outperform, with 22% upside potential. We find Close Date 20 Jul 2026

FIVE to be in a stronger fundamental position, with improved merchandising and marketing

FIVE Close Price (USD) 204.14

supporting a sustainable MSD% comp. Coupled with a HSD% contribution from store growth

Price Target (USD) 250.00

and the potential for more buybacks, this supports a 20%+ EPS CAGR FY25-FY28E.

Upside/(Downside) 22%

Despite posting a 23% comp in Q1, the stock sold off ~30% peak-to-trough as the 52-Week Range 251.63/130.00

potentially decelerating comp and tough comparison spooked the market. Fad aside, SPX 7,443.28

however, we believe that FIVE’s underlying comp momentum has improved from ~3.5% pre- FYE Jan

COVID to closer to MSD% today. Div Yield NA

Market Cap (USD) (M) 11,288

The improved underlying comp is a result of fundamental changes to stores, a renewed focus EV (USD) (M) 12,173

on core customers, a new social media-focused ad model, and a newfound appreciation of Performance YTD 1M 6M 12M

pricing power amid a benign competitive environment. Meanwhile, we expect FIVE to sustain Absolute (%) 8.4 5.2 6.8 45.8

its ~7% sales contribution from new store growth, with the potential to re-accelerate store SPX (%) 8.7 (0.8) 9.5 18.2

growth against stronger business fundamentals.