As previously reported, BofA downgraded Five Below (FIVE) to Underperform from Neutral with a price target of $75, down from $98, as the firm does not see a clear path to a turnaround in comparable store sales growth and expects continued margin deleverage on lower sales and incremental tariff costs. The company’s outsized sourcing exposure to China presents a risk given the strong likelihood of significant China tariffs coming into effect under a Trump administration, says the firm, which does not think Five has the pricing power to mitigate hefty tariffs as the value proposition is not resonating with consumers. The company is already in the process of reprioritizing lower price point items, adds the firm, which lowered its FY25 EPS estimate by 12% to $4.43.
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