Ollie's Bargain Outlet (NASDAQ:OLLI) has been upgraded to a ‘Buy’ rating by Jefferies analysts, who cited the company’s strong market position, traffic-driven model, and potential for long-term unit growth.
The firm set a new price target of $130, up from $120, noting that Ollie’s currently trades at roughly a 7x P/E discount to Five Below (FIVE), compared with a historical discount of about 1x.
Shares of Ollie’s traded up almost 4% at $95 late morning on Thursday.
Jefferies describes Ollie’s as the “#1 in closeout at a moment when scale matters most,” pointing to its national footprint of approximately 645 stores and twice the distribution centers of its nearest competitor.
The analysts believe that this scale allows Ollie’s to dominate mixed and clearance inventory and secure preferred vendor relationships, advantages that smaller regional players cannot match.
They highlighted the company’s traffic-led model, writing that “recent comps confirm the model is traffic‑led, not ticket‑driven, with comps highly correlated to foot traffic, a more durable demand driver.”
Jefferies also pointed to improvements following the FY’23 supply-chain reset, which have helped margin stability through disciplined buying, vendor leverage, and logistics scale.
Despite recent de-rating due to peak-margin concerns, freight uncertainty, and softer Q4 new-store results, Jefferies sees these factors as temporary. The firm notes that Ollie’s deliberate soft-opening strategy should smooth store ramps and “could unlock comp upside, leaving unit growth better positioned ahead.”
Looking ahead, Jefferies expects Ollie’s to expand toward roughly 1,300 stores from about 645 today, with minimal cannibalization and significant opportunities in the Midwest and West. The analysts noted that “ongoing retail dislocation supports unit growth, while new stores generate attractive returns and benefit from traffic-driven comps.”
Valuation remains a key factor in the upgrade. Ollie’s trades near the low end of its historical range despite improved fundamentals, and Jefferies sees the gap with peers as narrowing as traffic stability, maturing stores, and margin durability become clearer. The firm noted that similar value-focused retailers, including TJX, Walmart, and Costco, have historically re-rated once consistency is proven.
Jefferies now projects FY28 EPS of $5.20, with the $130 price target reflecting a 25x multiple on that estimate.
The firm believes that “as share gains, deal flow, and unit growth drive a re-rate,” Ollie’s is well-positioned to capture long-term upside.