Investing.com -- Wells Fargo downgraded Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) to "equal weight," noting that the retailer may face a trickier environment as the favourable conditions that fuelled its recent growth begin to normalise.
“The best time to own OLLI may have passed,” analyst wrote
The closeout retailer thrived during a historic inventory glut in 2022, capitalizing on a surge in value-focused consumer demand. However, Wells Fargo (NYSE:WFC) said this cycle appears to be winding down, leaving Ollie’s to navigate tighter retail inventories, limited margin expansion, and uncertainty around cost leverage.
“Looking into 2025, tight retail inventories may lead to a less robust closeout buying backdrop, while gross margin upside seems limited with Ollie at its target. Cost leverage is also a question given Ollie’s record of tight expense control.”
While recent liquidations by competitor Big Lots (NYSE:BIG) provide opportunities for market share gains and real estate acquisitions, Wells Fargo warned that the upside from this catalyst may already be priced into the stock. Additionally, concerns over the scalability of Ollie’s business model and questions about its long-term growth trajectory persist.
The brokerage lowered its price target to $95, reflecting balanced risk-reward potential as the retailer contends with more challenging conditions ahead.
Related Articles
Wells Fargo says best time to own Ollie's Bargain passed, downgrades stock
European shares settle at one-month high; French politics in focus
Ford UK chair calls on government for EV incentives, Sky News reports
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.