Five Below (FIVE) could keep its strong sales growth into H2, raise its fiscal 2026 outlook, return more cash through stock buybacks and deliver mid-teens earnings growth over time, UBS said in a note emailed Wednesday.

UBS expects Q2 comparable sales to reach about 14% to 15%, well above Five Below's 7% to 9% guidance, as recent operating improvements continue to support demand even as some product trends fade, according to the note.

The investment firm said it expects Five Below to raise its full-year comparable sales outlook, with H2 growth likely reaching the mid-single-digit range and fiscal 2026 comparable sales potentially reaching about 9% to 11%.

Five Below could use some of its excess cash for stock buybacks, with UBS estimating that a $500 million repurchase could add about $0.40 to earnings per share next year and regular buybacks could add 3% to 4% to annual EPS growth.

UBS reiterated the company's buy rating and $285 price target.

Price: 245.79, Change: +7.28, Percent Change: +3.05