Five Below (FIVE) has room to take up prices on its goods, manage its margins and still provide 'extreme value' for its consumers, UBS analysts wrote in a Tuesday note.

UBS analysts say the latest evaluation of the company's pricing shows a nearly 15% increase in prices on a subset of its products, reflecting the tariffs that were in place as of early June.

The analysts note that the data shows the company's best-selling stock-keeping units' prices rose 8% relative to last year, and that these price hikes are likely to have been manageable for the retailer's customers.

Comp trends have remained steady at Five Below, and this momentum is likely to persist into the second half of the year, UBS said. They also add that the stock is still trading at a discount to its historical valuation.

UBS retained a 12-month price target of $160 and a buy rating on the stock.

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