KeyBanc Capital Markets raised its price target on Ollie's Bargain Outlet Holdings to $120 from $98 and reiterated an Overweight rating, naming the discount retailer a top consumer hardlines investment heading into 2027.
The firm lifted its third-quarter comparable sales estimate to 1.0% from 0.0% based on store checks and proprietary data, above the consensus expectation of 0.1%. KeyBanc views second-quarter challenges as temporary rather than structural, with business conditions improving in the third quarter.
Ollie's trades at 19.5x 2026 earnings per share, down from a 10-year average of 30x. The company announced a $500 million share repurchase authorization on October 13, bringing total repurchase capacity to approximately $561 million. Ollie's holds $507 million in cash and investments, representing about 9% of market cap, with no meaningful debt.
KeyBanc expects the company to generate over $200 million in free cash flow in 2026, translating to a 5.0% free cash flow yield. The firm projects low-double-digit to mid-teens earnings per share growth supported by double-digit store growth and potential 5% annual share repurchases.
KeyBanc adjusted its 2026 earnings per share estimate to $4.64 and 2027 estimate to $5.00, basing the $120 price target on 24.0x the 2027 earnings per share estimate.