The stock market overall had a relatively good week, but Ollie's Bargain Outlet Holdings (OLLI 0.14%) had a spectacular one. The bellwether S&P 500 index inched up by less than 2%, but the discount retailer's stock roared ahead by 16%, according to data provided by S&P Global Market Intelligence.
The company has momentum thanks to encouraging guidance it proffered with its latest set of quarterly results published last month, making it a bright spot in the still fairly unpopular retail sector. Compounding that, this week an analyst upped his price target on the stock.
The analyst is Edward Kelly of top U.S. bank Wells Fargo. On Thursday, Kelly added $5 to his target for Ollie's shares, placing it at $75. He's also maintaining his overweight (read:buy) recommendation on the stock.
This is actually the prognosticator's second target price hike in less than a month. In mid-June, he similarly bumped it $5 higher, from $65 per share to $70.
In his latest research note, the prognosticator hearkened back to those quarterly results. The company, unhappily, saw net and comparable-store sales crumble (by a respective 10% and 17% year over year) and profitability plunge by 77%. Both revenue and net profit missed analyst expectations.
Yet investors were cheered by Ollie's upbeat guidance. The company now believes it will post net sales of $1.87 to $1.90 billion on comparable sales that should range from flat to a 2% decline from 2021. Non-GAAP (adjusted) net income should come in at $115 million to $125 million, which would represent a drop from last year's nearly $153 million.
In other words, in contrast to struggling traditional retailers, it seems as if Ollie's business should hold up well. That stands to reason since consumers tend to maintain or even increase their spending at discount outlets when the economy tightens as many analysts and pundits are expecting it to in the coming months.